The employees in the “Tik Tok” application own about 20% of the company’s shares, and their number outside America reaches 100,000 employees.
“Company offered “Byte Dance”, owner of the application “Tik Tok (China) bought shares owned by its employees outside the United States for about $171 per share, in a broad extension of the buyback program it launched in the United States last March, according to internal documents seen by the Financial Times.
In a global bulletin to employees on Wednesday, Byte Dance, the Chinese company that owns the TikTok app, said it had “received comments that some employees would like this opportunity to meet their cash and liquidity needs.”
The previous offer to buy Tik Tok employee shares
Byte Dance last offered to buy the shares of its global employees last December, for $160 per share.
The value of employee shares vested in the first quarter of this year is $176, according to internal documents seen by the Financial Times, which means that the internal valuation of Byte Dance may have increased since the beginning of the year, although this does not take into account into consideration of any dilution of its shares.
Globally, employees own about 20% of the company’s shares. Byte Dance has approximately 100,000 employees outside the United States.
Number of American Tik Tok employees
The Financial Times previously reported that employees of Tik Tok “The approximately 7,000 Americans, plus thousands of former employees, owe millions of dollars in taxes on shares in the company they were unable to sell.
Employees in Europe and the Asia-Pacific region have encountered similar problems, according to people familiar with the matter.
Challenges of employees selling Tik Tok shares
Despite growing uncertainty about TikTok’s future in the United States, Byte Dance’s valuation has risen from $100 billion in 2020 to $268 billion in December 2023.
Employees who acquired shares over the past few years expected a windfall once their money was cashed out, but ByteDance has restricted shares sold to outside investors and has only held small buyback programs in the past year.
Possibility of imposing a US ban on “Tik Tok”
It is also unlikely that Byte Dance will be listed on public markets in the United States, or make arrangements for outside investors to buy a significant portion of employee shares, while the US Senate is considering a bill that could lead to a national ban on Tik Tok. , which further weakens employees’ hopes for more liquidity.
The US House of Representatives has already approved legislation that will affect the TikTok application within the country unless it is sold to a non-Chinese company.
Its most recent stock offer at $170.81 per share allows non-U.S. employees to sell half of their vested stock units, with more shares to follow after a year.
Awards earned by employees in lieu of cash bonuses become eligible for sale one year after they vest, according to the documents.
A spokesman for the “Tik Tok” application announced that the latest stock offer was launched only one month after its launch in the United States due to “tax complications” there.
They noted that it would be the first stock deal for non-US employees in the first half of 2024.
Earlier this week, Byte Dance said in a statement: “We strictly adhere to the requirements of US tax laws.”
The formula for purchasing shares is not clear
ByteDance launched a buyback program for American employees in March, but employees claimed that the company’s formula for purchasing shares in the scheme was “arbitrary” or “unclear.”
In many cases, individuals were unable to sell enough shares to cover their tax liabilities.
Before Wednesday’s announcement, a former senior TikTok employee who was based in Europe said the lack of liquidity for ByteDance’s shareholders had a “huge impact on people’s lives.”
That person added that the buyback program was “so shrouded in ambiguity” that managers didn’t know how to advise their teams.
