CEO forgoes salary for 2020; agent base pay increases; and more – GeekWire
Redfin is making adjustments amid the COVID-19 disaster and uncertainty encompassing the authentic estate marketplace.
The Seattle authentic estate firm wrote a letter to shareholders Thursday outlining expense-slicing moves and other alterations remaining designed, which include:
- CEO Glenn Kelman will not acquire wage for the rest of 2020.
- Management crew will forego funds bonuses for 2020 all Redfin staff at its Seattle HQ will forego bonuses for initial fifty percent of 2020.
- Board customers will forego all funds charges associated with serving on Redfin’s board for 2020.
Redfin will also briefly raise the mounted portion of agent pay presented that compensation is getting a hit due to decreased home-purchasing and marketing exercise.
“We’re committed to this raise in the limited phrase, but if we see evidence that the downturn is possible to be prolonged, we could continue to have to make the painful alternative to furlough some staff and lay off other individuals, decisions that would apply to the two headquarters staff and authentic estate agents,” Redfin Chairman Bob Mylod wrote in the letter.
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Redfin experienced 3,377 staff as of Dec. 31.
The moves appear in response to social distancing mandates in various locales relevant to the coronavirus disaster and more substantial financial downturn. Redfin noted Wednesday that there had been 27% less buyers requesting to see properties above the psat week in contrast to past yr.
Previous week Redfin announced that RedfinNow, an arm of its organization that buys properties directly from owners and resells them to homebuyers, will briefly pause making offers on properties.
Mylod stated Redfin’s stability sheet is potent, with $328 million in funds as of March 1. The firm is also shifting speedily to sell RedfinNow properties that it owns.
“Redfin is a relatively new firm,” Mylod wrote. “But we are previous enough to have operated through the economic disaster of 2008 with a considerably considerably less confirmed organization and a very small portion of the funds that we have currently. That expertise has helped advise some of the defensive steps that we are utilizing. Even so, we have each self-confidence that we will appear out on the other side of this hard time in a position to go on offense and further more accelerate our marketplace share gains.”
Redfin is focusing on its more digital applications these kinds of as movie-chat tours to adapt to the new authentic estate weather.
Redfin rival Zillow Group outlined its personal coronavirus playbook this week, noting that it will slash expenditures by 25% this yr, freeze selecting across the firm, cut just about all marketing commit, and suspend home-purchasing through its Zillow Gives organization.
Here’s the entire letter to shareholders from Redfin Chairman Bob Mylod:
To My Fellow Redfin Shareholders:
Previous week, your board of directors held an unscheduled meeting with Redfin’s management crew to assess the affect that the COVID-19 virus is possible to have on our functions and economic position. We fixed in that meeting to undertake quick steps to shield the belongings of our firm.
Near the incredibly top of the list of those people belongings is our nationwide community of authentic estate agents who have designed Redfin the most successful authentic estate brokerage in the United States. The compensation of our agents is intensely variable and driven by home product sales. Nevertheless, with an expected content drop-off in transactions in the coming weeks and months, our agents’ wages are possible to be harm disproportionately. Accordingly, we moved to briefly raise the mounted portion of agent pay when we wait to superior comprehend the size and severity of the financial downturn that is incredibly possible coming. We’re committed to this raise in the limited phrase, but if we see evidence that the downturn is possible to be prolonged, we could continue to have to make the painful alternative to furlough some staff and lay off other individuals, decisions that would apply to the two headquarters staff and authentic estate agents.
Recognizing for now that escalating agents’ foundation pay will briefly raise running losses, our management crew has made the decision to forego funds bonuses for 2020 and all of the staff at Redfin’s headquarters have agreed to forego funds bonuses for the initial fifty percent of 2020. Our CEO, Glenn Kelman, has elected to not acquire a wage for the remainder of 2020. Influenced by our management team’s moves, our board of directors unanimously voted on Monday in favor of foregoing all funds charges associated with serving on Redfin’s board for 2020. From a pure bucks and cents viewpoint, these moves assist offset some of these costs. In truth, these moves are demonstrative of Redfin’s most vital asset: its lifestyle. At its core, Redfin is a lifestyle of service–in which your board of directors serves you, in which executives provide staff, in which engineers and analysts provide agents… and we all provide buyers.
In a predicament these kinds of as this, we are also really targeted on our stability sheet and our liquidity. We think that inspite of the issues in advance of us, our stability sheet is potent. We started March with $328 million of funds, funds equivalents, and limited- and long-phrase investments, which consisted only of U.S. authorities securities. Our $144 million of convertible personal debt does not mature till July 2023. Most importantly, we have been very careful with our stability sheet determination to RedfinNow home inventory. On March 17 RedfinNow suspended making further more immediate offers on properties. And we have moved with haste to sell RedfinNow properties that we personal. As of March 26, 2020 we held approximately $68 million of RedfinNow properties in inventory, of which approximately $23 million are less than deal to be obtained by buyers. This is down from December 31, 2019, when we held approximately $75 million in RedfinNow properties in inventory. We’re less than deal to purchase approximately $7 million in supplemental inventory from home sellers.
Redfin is a relatively new firm. But we are previous enough to have operated through the economic disaster of 2008 with a considerably considerably less confirmed organization and a very small portion of the funds that we have currently. That expertise has helped advise some of the defensive steps that we are utilizing. Even so, we have each self-confidence that we will appear out on the other side of this hard time in a position to go on offense and further more accelerate our marketplace share gains.
Ultimately, this pandemic appears possible to improve every little thing about authentic estate in favor of a technological innovation-driven brokerage like Redfin. Relaxation confident that Glenn and the overall Redfin crew are doing the job at an accelerated tempo to build the applications that will further more transform the way in which properties are bought and bought.
Bob Mylod, Redfin Chairman