In these times, double down — on your skills, on your knowledge, on you. Join us August 8-10 at Inman Connect Las Vegas to lean into the shift and learn from the best. Get your ticket now for the best price.
Workers at Better who took pay cuts and worked long hours to help the embattled mortgage lender weather lean times last year say they’re worried that the company won’t honor a promise of up to $100 million in company stock to reward them for their efforts.
The promise of retention bonuses was made at a March, 2022 all-hands meeting, just days after Better laid off thousands of employees, workers who attended the virtual meeting told Inman.
At the meeting, Better founder and CEO Vishal Garg made a personal commitment to provide a $50 million equity contribution to all employees still on the payroll as of March 11, 2022 — if they stayed on board for another year.
Employees were told the company was prepared to match Garg’s commitment with another $50 million in equity bonuses — “subject to board approval and terms and conditions that are being worked out.”
Fast forward to this year, when an all-hands meeting scheduled for March 23 to discuss terms of the bonuses disappeared from employees’ calendars without explanation — sparking fears that the promise wouldn’t be honored.
“March 12th 2023 has come and gone, and nobody has received a dime of the promised $100 million incentive,” a Better employee told Inman. “We are left feeling lied to, confused and frustrated.”
Screen shot of March, 2022 pledge by Better to provide up to $100 million in equity bonuses to employees who stuck with the company for a year.
The employee, who spoke to Inman on condition of anonymity because they are still employed by Better, said their entire real estate sales team took pay cuts and worked extended hours last year with the expectation that they would be rewarded for their sacrifice.
“Employees took massive pay cuts, lost bonus potential, reduction in benefits, and have worked harder than before with less resources,” the employee said. “It feels like a cruel joke.”
In a statement to Inman, a Better spokesperson said Better remains committed to distributing $100 million in equity-based bonuses to all eligible employees, “including $50 million from CEO and founder Vishal Garg’s personal equity. The company is taking proper measures to ensure the bonuses are paid accurately and efficiently, and the bonus compensation will be delivered to Better employees as promised.”
In addition to having their base pay cut from $72,000 to $35,000 and losing up to $14,400 in potential customer satisfaction bonuses in November, members of the team were asked to work from 9 a.m. to 7 p.m. six days a week, the employee said.
If somebody called on their day off, the employee said, “they told us to answer the phone.”
Another current employee who spoke to Inman on condition of anonymity said they are waiting to hear back from an attorney on the possibility of filing a class action lawsuit against Better and Garg.
“It was a personal promise made by Vishal for the first $50 million,” the employee said. “Many people have stayed on this year waiting to see what [the equity bonus] would look like. We went from over 11,000 employees, to 10,000 when it was announced. Now we’re down to a little over 1,100 employees.”
At that level of staffing, $100 million in equity bonuses would add up to nearly $91,000 in stock-based compensation per person — with $45,000 per employee coming from Garg personally. Equity compensation is typically offered to employees in the form of stock options or restricted stock.
Although companies can grant stock to employees even if they’re not publicly traded, handing out millions in equity bonuses could complicate Better’s ongoing effort to go public through a merger with a special purpose acquisition company (SPAC), Aurora Acquisition Corp.
Aurora was initially required to finalize its merger with Better Holdco — the parent company of Better Mortgage Corp., Better Real Estate LLC, Better Settlement Services LLC, and Better Cover LLC — by the end of 2021.
The terms of the SPAC merger have been revised to push the deadline for closing the deal back to Sept. 30, and in January Better rolled out a new product — the “One Day Mortgage” — to boost the company’s bottom line.
Get Inman’s Extra Credit Newsletter delivered right to your inbox. A weekly roundup of all the biggest news in the world of mortgages and closings delivered every Wednesday. Click here to subscribe.
