Lyft will pay some of its drivers up to $10,000 in cash bonuses ahead of the company’s forthcoming IPO -— an unusual benefit for a portion of the independent contractors who are critical to the company’s business model.
The drivers who receive a bonus will be given the option to put that money toward stock in the company.
Lyft detailed the program in IPO paperwork it filed Friday. It’s raising as much as $100 million in its public offering, beating competitor Uber to the punch.
The bonus program will provide one-time cash rewards to “recognize drivers who have contributed to our success.” Drivers can use those cash bonuses to buy stock in its “directed share program” when the company goes public. Because drivers are independent contractors, they wouldn’t traditionally be eligible for such a program, unlike certain employees, investors and board members.
Drivers will be rewarded for hitting certain milestones as of February 25, 2019. Drivers who have completed at least 20,000 rides as of that date will get $10,000, and drivers who have completed between 10,000 and 20,000 rides will get $1,000.
Money will also be reserved for drivers who’ve served on the company’s Driver Advisory Council. They could get $1,000. (If a driver is eligible for multiple cash bonuses, they’ll receive the one payout — whichever is the largest.)It’s a token of goodwill for the drivers who are indispensable to the company’s core ride-hailing business.
It also sets a precedent for rival Uber, which is also expected to go public this year.
Uber is working on its own program to distribute cash bonuses to some drivers, with the option to put that money toward stock, according to a source familiar with the matter. It plans to take a tiered approach as well, granting bonuses to drivers based on various trip thresholds, the source said.
San Francisco-based driver Jay Cradeur says he is eligible for $1,000 because he has given 14,000 rides to date. He plans to use his bonus to buy stock in the company “just for the giggle.“
“It is money I was not expecting. Let’s see if and when the IPO happens. If it does, that will now be a more interesting day,” Cradeur said.
Some experts are already expressing concerns about the gesture, suggesting it could be an olive branch intended to mitigate a potential public relations nightmare about how the company treats its drivers.”I see it as an effort to ward off negative publicity when they will be most vulnerable to publicity,” said Thomas Kochan, George Maverick Bunker professor at the MIT Sloan School of Management, told CNN Business.
Kochan told CNN Business that it’s “clear” that both Uber and Lyft are worried the drivers will use the IPO filings as “an opportunity raise their voices and ask how will this benefit them.“
“I don’t think it will be enough to silence the increasing number of drivers and organizations beginning to organize and call for better treatment and more equitable sharing of the gains they help produce,” he added.