UPDATED, April 7, 2021, 6:05 p.m.: Compass’ initial public offering last week made its founders and top executives millions — or billions in the case of its largest investor, SoftBank Group, at least on paper.
Though Compass priced its stock at $18 — more conservative than the $23 to $26 per share it initially targeted — it closed at $20.15 on its first day of trading. The IPO raised $450 million for the company, minus $22.5 million in underwriting fees, according to the company’s final prospectus filed Friday.
Since Compass launched in 2012, it’s raised more than $1.5 billion from investors including Joshua Kushner’s Thrive Capital, Salesforce CEO Marc Benioff, former American Express CEO Kenneth Chenault and developers Miki Naftali and LeFrak. Many investors’ convertible preferred stock was converted into Class A shares on a one-for-one basis after the IPO. Series B and C investors’ shares were converted at a one-for-10 basis, according a source with direct knowledge. The prospectus shows that Series D were converted into 1.02427 shares of Class A common stock.
Prior to the IPO, some shareholders, including Discovery and SoftBank, indicated interest in purchasing another $140 million in shares. It’s unclear if the investors followed through.
For many of the tech and Wall Street veterans in Compass’ C-suite, the IPO isn’t their first rodeo.
One big question is how its 19,000 agents fared in the IPO. The firm has used equity as a recruitment tool since its founding, but in 2018 introduced a program that allowed agents to convert commissions into stock options and, later, restricted stock. Over the next two years, Compass said agents invested $70 million in commissions to buy stock options. (The firm did not disclose the 2020 figure.)
Compass also expected many of its agents to participate in the initial offering. The company set aside about 7 percent of its Class A shares, or about 1.75 million shares worth $31.5 million, for agents.
Agents were given the chance to buy shares pre-IPO at the initial offering price of $18 per share through a directed share program run by one of the underwriters, Morgan Stanley, which committed to take 7.25 million shares as part of the offering. Compass declined to comment on the program and the investment bank did not respond.
It’s unknown how many agents are shareholders, and whether they or Compass’ early investors held their stock.
Here’s the value of key investors’ holdings in Compass, based on Thursday’s closing price and the owners of Class A shares listed in the company’s filings with the U.S. Securities and Exchange Commission.
SoftBank Group | $2.55 billion
Before Compass began trading, its biggest investor owned close to 127 million shares worth $2.28 billion. Assuming SoftBank held its shares, they would be worth $2.55 billion.
Discovery Capital Management | $675.5 million
The hedge fund led by Robert Citrone held 33.5 million shares worth $603 million as trading began. If Discovery held its position, the fund would have ended the day with shares worth about $37 million less.
Ori Allon | $384.8 million
The brokerage’s co-founder and chief strategist held more than 19 million shares worth nearly $344 million at the start of trading. If his holdings remained unchanged, Allon’s shares are worth about $385 million.
Robert Reffkin | $173.5 million
Compass’ CEO and co-founder owned 8.6 million shares of Class A stock before he rang the opening bell Thursday. At the initial share price of $18, his shares were worth $155 million. The CEO will receive more than 25.8 million Class A shares in coming years dependent on his tenure and the performance of the company stock, according to filings. Reffkin’s family also expressed interest in purchasing $18.5 million worth of shares ahead of the initial offering. It’s unclear if they followed through; Compass declined to comment.
Joseph Sirosh | $84.6 million
After Reffkin, Compass’ chief technology officer is the largest shareholder in the brokerage’s C-suite. He owned 4.2 million shares as trading kicked off, though roughly 30 percent are stock options Sirosh has until the end of April to exercise. Not counted in the total is an additional 1.24 million shares that he will receive if he meets certain performance conditions.
Greg Hart | $31 million
The brokerage’s chief product officer holds stock options for 1.55 million shares that he has until the end of April to exercise. Hart joined Compass last April after 23 years at Amazon, where his last role was at the helm of Prime Video.
Kristen Ankerbrandt | $16.9 million
Compass’ CFO has stock options for just over 843,370 shares, which she also has until the end of April to exercise. Ankerbrandt joined Compass in 2018 after 12 years at the Carlyle Group. Prior to that, she was at Goldman Sachs.
Brad Serwin | $16.3 million
The firm’s general counsel holds just over 810,000 shares, though 88 percent are stock options he has to exercise by the end of April. He joined the company last May after five years as general counsel at Glassdoor. He was previously the head of legal at eBay.
Notable board members | $3.9 million apiece
Four people who joined Compass’ board of directors last year hold options for 194,000 shares each, to be exercised by the end of April. The directors are Eileen Murray, co-CEO of Bridgewater Associates and previously an executive at Morgan Stanley and Credit Suisse; former Oracle president Charles Phillips; LinkedIn’s CFO Steven Sordello; and Pamela Thomas-Graham, who was previously Credit Suisse’s CMO and CEO of CNBC Television and CNBC.com.
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UPDATE: This story was updated to include more details on the conversion of Class B, C and D shares. It also previously misstated Ori Allon and Kenneth Chenault’s titles.