Cybersecurity startup Tanium, valued at over $9 billion, exercised a clause that allowed it to buy its own shares from former employees whether they wanted to sell or not

Orion Hindawi tanium

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Like many startups, cybersecurity firm Tanium offers its employees equity in the company as part of their compensation packages. 

Unlike many, if not most of its peers, however, Tanium places a clause in at least some of its employment contracts that allows it to buy those shares back within a year of an employee’s departure from the company, according to four people with knowledge of the situation.

What’s more, two former employees say that Tanium recently exercised this clause to purchase their shares, regardless of whether they wanted to sell.

The clause in question says that the company reserves the “option to repurchase all or a portion of the Shares” issued to employees for up to one year after the employee leaves the company, according to a copy of the document reviewed by Business Insider.

In the last week of September, Tanium sent emails to some former employees saying that it would buy back their shares at $8.10 each: “The company hereby informs you of its bona fide intent to exercise the Repurchase Option,” the email reads in part, according to a copy viewed by Business Insider.

“‘Surprised’ was my initial reaction,” one of the people affected told Business Insider.

“I had not heard of that happening before. To me it felt like a gut punch. One of the reasons for working for the company is dangling the carrot of eventually going public or eventually getting acquired so employees would monetarily benefit from that,” the person said.

Rachel Pepple, vice president of global brand and communications at Tanium, told Business Insider that the buybacks were part of a regular process at Tanium. Every three months, Tanium works with an unnamed independent third party to evaluate a “fair market value” for its shares, and then decides whether or not to exercise the buyback clause.

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“We go through that exercise every three months. It doesn’t have to do with external factors. They give us what they believe is fair market value for shares, and we go out and offer former employees buybacks,” Pepple said.

Tanium announced a $150 million funding round the week after the most recent buyback notice

Tanium, which describes itself as a “unified endpoint management” platform, counts Salesforce Ventures and Andreessen Horowitz as investors, and has raised over $900 million. Its most recent round gave it a valuation of over $9 billion, up from the flat $9 billion at which it was valued at the time Salesforce Ventures invested just this past June.

Notice of the most recent buyback reached employees came about a week before Tanium announced on October 5th that it had raised $150 million in new funding from investors including Fidelity Management & Research Company, Baillie Gifford, and clients of T. Rowe Price.

The buybacks are “not related to funding rounds at all,” Pepple said.

Pepple says that the clause was first added to employee contracts starting in September 2018, and that it’s exercised its buyback rights twice in 2020 thus far. She also says that any former employee with eligible shares got the buyback …read more

Source:: Businessinsider – Tech

      

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