Spotify’s Daniel Ek is poised to join his Swedish co-founder as a billionaire, as long as the company’s value established in recent private trading holds up during an unusual public listing.
Mr Ek owns 9 per cent and Martin Lorentzon has 12 per cent of the music-streaming service excluding warrants, according to a regulatory filing Wednesday. Their holdings would be valued at $1 billion and $1.4bn, respectively, if the shares trade at the $64 average that investor Tencent paid for a stake in recent months.
Mr Ek, 35, still may fall short of the billion-dollar mark as the company shuns a traditional initial public offering. Instead, the opening public price of its ordinary shares on the New York Stock Exchange will be determined by buy and sell orders collected on the day of the listing, the company said in the filing.
In 2017, private trades valued the company at $6.3bn to $20.9bn. So far this year, its value climbed as high as $23.4bn. A valuation of about $10bn after the first day of trading would make Mr Ek a billionaire, according to the Bloomberg Billionaires Index.
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That’s not the only way the listing differs from its peers. Absent from the filing are large one-time awards of stock, or promises of big grants in conjunction with an IPO, which tech companies often grant top executives.
Snap, for example, revealed in its IPO filing last year that chief strategy officer Imran Khan received stock worth about $145 million in 2015 after he joined from Credit Suisse Group. The social-media company also said CEO Evan Spiegel would get stock equal to 3 per cent of Snap’s shares at the close of the IPO - worth $636.6m when granted.
When Facebook went public, CEO Mark Zuckerberg held 120 million stock options that ballooned in value to $4.55bn at the $38 listing price. Jeff Weiner of LinkedIn held options worth $150.3m at the $45 offering price.
Mr Ek stopped receiving a salary on July 1 but is eligible for an annual bonus of up to $1m if certain performance goals are met. He collected the full amount last year. He’s got an employment agreement that expires when he turns 65, which is in about three decades.
However the listing proceeds Mr Ek and Mr Lorentzon will keep control. The filing confirms they are the sole owners of beneficiary certificates that gives them 80 per cent of the voting rights.
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What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
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