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Spotify is a for-profit enterprise and if laying people off is the right financial choice then he's doing his job well. He can sell his shares when he feels lik

Spotify is a for-profit enterprise and if laying people off is the right financial choice then he's doing his job well. He can sell his shares when he feels like it.

COGlory 3y ago
Of course he can. Still makes him an asshole.
- jstummbillig 3y ago
  Capitalism, where you are happy to profiteer while it works for you, and people are assholes, when it doesn't.
- chpatrick 3y ago
  Does it? Should Spotify keep employing people if it's not in their business interest? It sucks if you're fired but they went to work for a publicly traded company that drove the income from streaming music to almost zero for musicians, not a charity.
Ekaros 3y ago
Also clearly the buyers of these shares think it was right decision. As otherwise they would not be buying at this price.
- kurthr 3y ago
  It's not like the CFO has any more information than they do.
  - wodenokoto 3y ago
    Well, he had to sell them _after_ the fact. But it does sound like his opinion on the cut downs is different than the market.
    - kurthr 3y ago
      Didn't the stock price go up _after_ the fact? It's about being able to predict what happens in the future that matters, unless you're supposing that he would have bought immediately before the announcement and sold after.
    - blasphemers 3y ago
      Not necessarily, the article didn't say what percentage of his stock he sold. It's pretty normal risk management to diversify your portfolio and he could have just needed the cash. Interest rates are pretty high right now, maybe he wanted to pay off something instead of using his line of credit.
- deleted 3y ago
  [deleted]
game_the0ry 3y ago
This is a fair assumption, but incomplete. Its the C-suite management that makes all the decisions and reaps all the rewards, but when they make mistakes, they don't fire themselves, they fire employees, many who had no control of the strategic mis-steps of their leadership. Sometimes the C-suite needs to be fired.
- eej71 3y ago
  It is ultimately the shareholders who reap these rewards.
- wongarsu 3y ago
  I'm not sure Spotify has really made any mistakes here though. They took a risk that didn't pan out. For an omnipotent being that would be a mistake, but for a person that only has the information available at the time it can still have been the right bet. Firing people when their bets don't pan out just leads to a risk averse culture that dooms any company to failure
  - Pentamerous 3y ago
    But aren't layoffs ultimately a mistake? Shouldn't the stress of losing a job (also) be on the shoulders of who made the incorrect decisions?
  - digging 3y ago
    Taking a risk that doesn't pan out can also be a bad idea, though. It depends on what the possible outcomes were and what the chances of each outcome were. The important thing to evaluating someone's decision making ability is to look at the decision they made with the information they had. Was it a good bet to dramatically overhire? I don't know!, but analysts can and should (rather, have no excuse not to). It's possible to determine what information the C-suite had access to and how risky they believed the decision to be. Did they play fast and loose with peoples' livelihoods for a tiny chance of unsustainable profit? Might be a bad decision.
    - 3y ago
CPLX 3y ago
Our society is inches away from extreme violence at all times and the relative peace and legitimacy of that society depends on securing broad consensus and consent of the governed and a reasonable distribution of resources. He can be killed and eaten for his protein content when someone feels like it too.
- erulabs 3y ago
  Well, as a member of society, my vote goes to the market over, you know, cannibalism. Pretty sure that vote isn’t hanging in the balance of the Spotify CFO.
  - CPLX 3y ago
    Cannibalism isn’t inconsistent with a free market any more than a steakhouse is That’s the problem with free markets. It’s just a description of how people answer resource allocation questions. We still have to agree on and enforce our value system.
coldbrewed 3y ago
If you agree with the narrative of shareholder primacy and are looking at short term outcomes then sure, nothing is wrong here. But this means that we're ignoring the harm that was done to the people that lost their income and the disruptions that the rest of the org will experience. Layoffs can be devastating to the people that were terminated; a job loss is one of the higher stress events one can experience. If you take into account the larger impact than "shareholder value" then dumping stock to capture value is an abdication of responsibility on the CEO for over -hiring, and has terrible optics of financial gain right when a number of employees took it on the chin.
- brvsft 3y ago
  > But this means that we're ignoring the harm that was done to the people that lost their income and the disruptions that the rest of the org will experience. As opposed to the 'benefit' that was done while they were granted income? I'm unsure what your point is. Is a business never supposed to 'harm' its employees? They're never allowed to fire people? What is the logical conclusion of your statement? A business ought to be liable to keep their employees employed forever even if it means the business becomes unprofitable and eventually has to declare bankruptcy, resulting in the firing of all employees? Who prevents the harm then? Or is this where the magical thinking that government will make it all better using the taxes from the other companies and employees that have yet to go bankrupt despite being unable to fire anyone ever?
  - aaomidi 3y ago
    It should actually be very very expensive for a company to fire people. Why do stock markets have an automated forced "PAUSE" when stocks seem like they are crashing? It's because companies, investors, people, or even computers don't always act rationally. That pause has prevented a lot of hiccups from turning into full-blown crashes. Right now, when a company lays people off, the town, state, and federal government are the ones who have to end up picking up the downstream effects of that in the macro sense. And local businesses, families, loved ones have to pick them up in the micro sense. This trade doesn't actually make sense if you think about it, a company _should not_ be able to cause that level of a disruption, without a penalty to itself. This is why I actually don't mind some specifics of European companies, where firing people is _genuinely really hard_. This also means that when hiring, you simply have to plan better. It is okay to expect a large company to "plan better" than an individual with a single income stream. It is okay to push the burden of the pain of bad markets onto companies, rather than individuals.
rco8786 3y ago
> He can sell his shares when he feels like it He, in fact, cannot. As a C level executive he is going to trade on a 10b5-1 schedule.
- hx8 3y ago
  Individuals trading on a 10b5-1 schedule have a lot of input on that schedule.
  - rco8786 3y ago
    Months or years in advance. Yes.
- jkukul 3y ago
  Thanks for the insightful comment. I guess they can still conveniently schedule when the layoffs are announced and make it happen right before the 10b5-1 schedule? All the previous layoffs announcements were followed by the stock rising up.
  - bradjohnson 3y ago
    Exactly. The 10b5-1 schedule is a layer of misdirection, but the executives still have their hands firmly on the levers of price manipulation.
    - rco8786 3y ago
      There is no way to know what effect a layoff will have on stock price in advance. This sale would have happened in the exact same way if the stock had tanked after the layoff.
      - RankingMember 3y ago
        > There is no way to know what effect a layoff will have on stock price in advance Sure, but looking at precedent gives you info to make a good bet- the last 2 Spotify layoffs this year each caused their stock to jump.
hx8 3y ago
* This is a classic highlight of company leadership focused on quarterly results. The stock has a good quarter, the CFO is now much richer. * At a base level this is one person profiting off misfortune he caused other people. This isn't the pro-social type of behavior I would want to be encouraged. * Companies primary focus is on satisfying Wall Street, while avoiding too much scrutiny from DC.
- forward1 3y ago
  All business is profiting off misfortune of other people. That is the cornerstore of post-industrial capitalism: maximize the externalization of the costs of production. Name one product, service or industry which does not harm people, animals or the environment - impossible!
  - CPLX 3y ago
    No it’s not. This is nihilism. Growing food and bringing it to you is one example of millions. And no it doesn’t “harm the environment” to dig a potato out of the ground every year or whatever.
    - bigtex88 3y ago
      This is a bit of a naive viewpoint considering the massive amount of damage that modern agricultural practices have done to the environment.
    - forward1 3y ago
      Growing food absolutely harms the environment. Maybe not one potato, but modern agriculture is a leading cause of climate change (mostly animal ag, but the point remains). This is not nihilism. This is what capitalism is by definition. Says Rob Urie: > Economic production that produces toxic externalities like global warming, dead oceans, undrinkable water, unbreathable air, etc, depends on assigning little or no value to these. To make this very clear, Western economic ‘accounting’ places no value on these, on the most fundamental necessities of living beings, by design. As Oscar Wilde put it, a cynic is someone who knows the price of everything and the value of nothing. This is in fact a summation of Western economics; circumscription of the ‘knowable’ world by what has had a price tag put on it. The externalized costs of capitalist production are real— more real than the stuff in stores that is only ‘cheap’ because the true costs were lobbed off on people who haven’t yet fought back. - https://www.counterpunch.org/2014/06/09/global-warming-is-economic-imperialism/ https://www.counterpunch.org/2014/06/09/global-warming-is-ec...
oatmeal1 3y ago
On the one hand this is true. On the other hand, it's reasonable to expect extraordinary leadership from executives paid extraordinary amounts of money. Cashing in millions in stock options after layoffs is bad optics, and diminishes trust in company leadership, and employee loyalty. One might expect executives to put off cashing in shares for some time to avoid these optics, even if it cost them a small amount off the top.
ta_billlegrand 3y ago
As a legal matter, no, he can't really sell his shares when he feels like it. (Disclaimer: IANAL and this is not advice.) The Spotify insider trading policy [1] prohibits transactions during "blackout periods," which start with the last month of the fiscal quarter (so December 1, in this case) and end after earnings are released. These share sales were presumably executed pursuant to a 10b5-1 plan, so he did something like set up a target price ahead of time at which he would sell. It just so happened that the plan was triggered when the stock surged on news of layoffs. I don't think the optics are great there! But it's at least sort of a coincidence. [1] https://s29.q4cdn.com/175625835/files/doc_downloads/gov-docs/Insider-Trading-Policy-(IR).pdf https://s29.q4cdn.com/175625835/files/doc_downloads/gov-docs...
- RankingMember 3y ago
  Wouldn't he have presumably had some input as to the timing of the layoffs?
  - deleted 3y ago
    [deleted]
empathy_m 3y ago
> He can sell his shares when he feels like it. I thought that as a corporate officer he kind of can't sell his shares when he feels like it? My layperson's understanding is that people like him have to decide in advance when they're going to sell shares and tell the SEC (by filing a 10b5-1 with a preset sales schedule and cooling-off period before sales start). I thought that the most control he would get is choosing to suspend the plan (i.e. keep shares instead of selling them on the pre-decided date). Are there other ways he can sell his shares whenever he wants? Can he borrow using them as collateral whenever he likes, for example?
- macksd 3y ago
  As I understand it, the law is that they're not allowed to trade while in possession of material, non-public information, but beyond that most of the practices are there to just entirely avoid the suspicion or appearance of foul play. Sometimes executives are allowed to trade during windows immediately after announcing results, etc. The law would still dictate that they do not trade if they know about upcoming acquisitions or changes, etc. but someone would still have to prove that, and it's a risk that is removed if the executive just follows a preset schedule.
- bradjohnson 3y ago
  This is my understanding as well. It's also my understanding that it's not illegal to coordinate with other executives when you're selling throughout the year and then drop news that influences the price in a particular direction just before or after time of sale in order to ensure that you profit.
apwell23 3y ago
> then he's doing his job well He got fired today.

Spotify is a for-profit enterprise and if laying people off is the right financial choice then he's doing his job well. He can sell his shares when he feels like it.

COGlory 3y ago

Of course he can. Still makes him an asshole.

jstummbillig 3y ago
Capitalism, where you are happy to profiteer while it works for you, and people are assholes, when it doesn't.
chpatrick 3y ago
Does it? Should Spotify keep employing people if it's not in their business interest? It sucks if you're fired but they went to work for a publicly traded company that drove the income from streaming music to almost zero for musicians, not a charity.

Ekaros 3y ago

Also clearly the buyers of these shares think it was right decision. As otherwise they would not be buying at this price.

kurthr 3y ago
It's not like the CFO has any more information than they do.
- wodenokoto 3y ago
  Well, he had to sell them _after_ the fact. But it does sound like his opinion on the cut downs is different than the market.
  - kurthr 3y ago
    Didn't the stock price go up _after_ the fact? It's about being able to predict what happens in the future that matters, unless you're supposing that he would have bought immediately before the announcement and sold after.
  - blasphemers 3y ago
    Not necessarily, the article didn't say what percentage of his stock he sold. It's pretty normal risk management to diversify your portfolio and he could have just needed the cash. Interest rates are pretty high right now, maybe he wanted to pay off something instead of using his line of credit.
deleted 3y ago
[deleted]

game_the0ry 3y ago

This is a fair assumption, but incomplete. Its the C-suite management that makes all the decisions and reaps all the rewards, but when they make mistakes, they don't fire themselves, they fire employees, many who had no control of the strategic mis-steps of their leadership. Sometimes the C-suite needs to be fired.

eej71 3y ago
It is ultimately the shareholders who reap these rewards.
wongarsu 3y ago
I'm not sure Spotify has really made any mistakes here though. They took a risk that didn't pan out. For an omnipotent being that would be a mistake, but for a person that only has the information available at the time it can still have been the right bet. Firing people when their bets don't pan out just leads to a risk averse culture that dooms any company to failure
- Pentamerous 3y ago
  But aren't layoffs ultimately a mistake? Shouldn't the stress of losing a job (also) be on the shoulders of who made the incorrect decisions?
- digging 3y ago
  Taking a risk that doesn't pan out can also be a bad idea, though. It depends on what the possible outcomes were and what the chances of each outcome were. The important thing to evaluating someone's decision making ability is to look at the decision they made with the information they had. Was it a good bet to dramatically overhire? I don't know!, but analysts can and should (rather, have no excuse not to). It's possible to determine what information the C-suite had access to and how risky they believed the decision to be. Did they play fast and loose with peoples' livelihoods for a tiny chance of unsustainable profit? Might be a bad decision.
  - 3y ago

CPLX 3y ago

Our society is inches away from extreme violence at all times and the relative peace and legitimacy of that society depends on securing broad consensus and consent of the governed and a reasonable distribution of resources. He can be killed and eaten for his protein content when someone feels like it too.

erulabs 3y ago
Well, as a member of society, my vote goes to the market over, you know, cannibalism. Pretty sure that vote isn’t hanging in the balance of the Spotify CFO.
- CPLX 3y ago
  Cannibalism isn’t inconsistent with a free market any more than a steakhouse is That’s the problem with free markets. It’s just a description of how people answer resource allocation questions. We still have to agree on and enforce our value system.

coldbrewed 3y ago

If you agree with the narrative of shareholder primacy and are looking at short term outcomes then sure, nothing is wrong here. But this means that we're ignoring the harm that was done to the people that lost their income and the disruptions that the rest of the org will experience. Layoffs can be devastating to the people that were terminated; a job loss is one of the higher stress events one can experience. If you take into account the larger impact than "shareholder value" then dumping stock to capture value is an abdication of responsibility on the CEO for over -hiring, and has terrible optics of financial gain right when a number of employees took it on the chin.

brvsft 3y ago
> But this means that we're ignoring the harm that was done to the people that lost their income and the disruptions that the rest of the org will experience. As opposed to the 'benefit' that was done while they were granted income? I'm unsure what your point is. Is a business never supposed to 'harm' its employees? They're never allowed to fire people? What is the logical conclusion of your statement? A business ought to be liable to keep their employees employed forever even if it means the business becomes unprofitable and eventually has to declare bankruptcy, resulting in the firing of all employees? Who prevents the harm then? Or is this where the magical thinking that government will make it all better using the taxes from the other companies and employees that have yet to go bankrupt despite being unable to fire anyone ever?
- aaomidi 3y ago
  It should actually be very very expensive for a company to fire people. Why do stock markets have an automated forced "PAUSE" when stocks seem like they are crashing? It's because companies, investors, people, or even computers don't always act rationally. That pause has prevented a lot of hiccups from turning into full-blown crashes. Right now, when a company lays people off, the town, state, and federal government are the ones who have to end up picking up the downstream effects of that in the macro sense. And local businesses, families, loved ones have to pick them up in the micro sense. This trade doesn't actually make sense if you think about it, a company _should not_ be able to cause that level of a disruption, without a penalty to itself. This is why I actually don't mind some specifics of European companies, where firing people is _genuinely really hard_. This also means that when hiring, you simply have to plan better. It is okay to expect a large company to "plan better" than an individual with a single income stream. It is okay to push the burden of the pain of bad markets onto companies, rather than individuals.

rco8786 3y ago

> He can sell his shares when he feels like it He, in fact, cannot. As a C level executive he is going to trade on a 10b5-1 schedule.

hx8 3y ago
Individuals trading on a 10b5-1 schedule have a lot of input on that schedule.
- rco8786 3y ago
  Months or years in advance. Yes.
jkukul 3y ago
Thanks for the insightful comment. I guess they can still conveniently schedule when the layoffs are announced and make it happen right before the 10b5-1 schedule? All the previous layoffs announcements were followed by the stock rising up.
- bradjohnson 3y ago
  Exactly. The 10b5-1 schedule is a layer of misdirection, but the executives still have their hands firmly on the levers of price manipulation.
  - rco8786 3y ago
    There is no way to know what effect a layoff will have on stock price in advance. This sale would have happened in the exact same way if the stock had tanked after the layoff.
    - RankingMember 3y ago
      > There is no way to know what effect a layoff will have on stock price in advance Sure, but looking at precedent gives you info to make a good bet- the last 2 Spotify layoffs this year each caused their stock to jump.

hx8 3y ago

* This is a classic highlight of company leadership focused on quarterly results. The stock has a good quarter, the CFO is now much richer. * At a base level this is one person profiting off misfortune he caused other people. This isn't the pro-social type of behavior I would want to be encouraged. * Companies primary focus is on satisfying Wall Street, while avoiding too much scrutiny from DC.

forward1 3y ago
All business is profiting off misfortune of other people. That is the cornerstore of post-industrial capitalism: maximize the externalization of the costs of production. Name one product, service or industry which does not harm people, animals or the environment - impossible!
- CPLX 3y ago
  No it’s not. This is nihilism. Growing food and bringing it to you is one example of millions. And no it doesn’t “harm the environment” to dig a potato out of the ground every year or whatever.
  - bigtex88 3y ago
    This is a bit of a naive viewpoint considering the massive amount of damage that modern agricultural practices have done to the environment.
  - forward1 3y ago
    Growing food absolutely harms the environment. Maybe not one potato, but modern agriculture is a leading cause of climate change (mostly animal ag, but the point remains). This is not nihilism. This is what capitalism is by definition. Says Rob Urie: > Economic production that produces toxic externalities like global warming, dead oceans, undrinkable water, unbreathable air, etc, depends on assigning little or no value to these. To make this very clear, Western economic ‘accounting’ places no value on these, on the most fundamental necessities of living beings, by design. As Oscar Wilde put it, a cynic is someone who knows the price of everything and the value of nothing. This is in fact a summation of Western economics; circumscription of the ‘knowable’ world by what has had a price tag put on it. The externalized costs of capitalist production are real— more real than the stuff in stores that is only ‘cheap’ because the true costs were lobbed off on people who haven’t yet fought back. - https://www.counterpunch.org/2014/06/09/global-warming-is-economic-imperialism/ https://www.counterpunch.org/2014/06/09/global-warming-is-ec...

oatmeal1 3y ago

On the one hand this is true. On the other hand, it's reasonable to expect extraordinary leadership from executives paid extraordinary amounts of money. Cashing in millions in stock options after layoffs is bad optics, and diminishes trust in company leadership, and employee loyalty. One might expect executives to put off cashing in shares for some time to avoid these optics, even if it cost them a small amount off the top.

ta_billlegrand 3y ago

As a legal matter, no, he can't really sell his shares when he feels like it. (Disclaimer: IANAL and this is not advice.) The Spotify insider trading policy [1] prohibits transactions during "blackout periods," which start with the last month of the fiscal quarter (so December 1, in this case) and end after earnings are released. These share sales were presumably executed pursuant to a 10b5-1 plan, so he did something like set up a target price ahead of time at which he would sell. It just so happened that the plan was triggered when the stock surged on news of layoffs. I don't think the optics are great there! But it's at least sort of a coincidence. [1] https://s29.q4cdn.com/175625835/files/doc_downloads/gov-docs/Insider-Trading-Policy-(IR).pdf https://s29.q4cdn.com/175625835/files/doc_downloads/gov-docs...

RankingMember 3y ago
Wouldn't he have presumably had some input as to the timing of the layoffs?
- deleted 3y ago
  [deleted]

empathy_m 3y ago

> He can sell his shares when he feels like it. I thought that as a corporate officer he kind of can't sell his shares when he feels like it? My layperson's understanding is that people like him have to decide in advance when they're going to sell shares and tell the SEC (by filing a 10b5-1 with a preset sales schedule and cooling-off period before sales start). I thought that the most control he would get is choosing to suspend the plan (i.e. keep shares instead of selling them on the pre-decided date). Are there other ways he can sell his shares whenever he wants? Can he borrow using them as collateral whenever he likes, for example?

macksd 3y ago
As I understand it, the law is that they're not allowed to trade while in possession of material, non-public information, but beyond that most of the practices are there to just entirely avoid the suspicion or appearance of foul play. Sometimes executives are allowed to trade during windows immediately after announcing results, etc. The law would still dictate that they do not trade if they know about upcoming acquisitions or changes, etc. but someone would still have to prove that, and it's a risk that is removed if the executive just follows a preset schedule.
bradjohnson 3y ago
This is my understanding as well. It's also my understanding that it's not illegal to coordinate with other executives when you're selling throughout the year and then drop news that influences the price in a particular direction just before or after time of sale in order to ensure that you profit.

apwell23 3y ago

> then he's doing his job well He got fired today.