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Uber, Lyft to provide some driver ‘ s shares to listing on a stock exchange

(Reuters) – Uber Technologies Inc and Lyft to offer cash bonuses for some of their most active drivers with the option to purchase shares in the ride-hailing from the companies long-awaited Wall Street debut, is a bold attempt to improve driver relations as companies transition to the public markets.

FILE PHOTO: the Uber logo is displayed on a mobile phone in London, great Britain, September 14, 2018. REUTERS/Hannah Mckay/File Photo

Both programs offer drivers who have driven the longest and logged the most km for the companies the unique opportunity to purchase shares at the initial public offering, for shares begin trading on public exchanges, according to four sources with knowledge of the matter. Such transactions are usually not available for private investors.

The move is the latest bid by Uber and Lyft to improve relations with directors who have long contested their classification as independent contractors and what they have claimed are the low wages and the poor treatment by the companies. Both companies still face thousands of driver arbitration claims about their work situation.

Lyft plans to drivers who are registered at least 10,000 rides on the platform to $1,000 that can be held as a cash bonus or to buy with the initial public OFFERING of shares, one of the sources said on Thursday. The plan is an attempt to reward the longest-serving and most active directors, who do not enjoy employee benefits such as health insurance and the fee for the costs.

A driver who has completed and 20,000 rides would be in order to qualify for the $10,000 in cash or an equivalent amount of shares, the person said. It was not clear how many drivers may be eligible, but there is no limit on the program.

Many drivers in urban areas such as San Francisco and Los Angeles to drive for both Uber and Lyft, and some may stand to benefit from stock-based programs.

The Wall Street Journal first reported Uber and Lyft, the driver stock plans earlier on Thursday.

Lyft plans to launch its “roadshow” when the company will pitch potential investors to purchase shares in the offer, the week of March 18, Reuters reported last week. The roadshow is expected to be about two weeks, is likely to make Lyft the first Wall Street debut of a group of highly valued, venture-backed companies expected to go public this year.

Both Uber and Lyft confidentially filed for an IPO in December. Lyft is expected to be in the public release of the regulatory paperwork this week, and probably will contain details about the driver stock reward program.

Uber, Lyft much larger rival, still need a few weeks to prepare for the IPO. The company is working out the details on a comprehensive program for drivers and that a significant proportion of the 3 million active truck drivers and couriers worldwide a cash bonus which they can use for the purchase of shares at the IPO price, according to three people with knowledge of the matter.

The stock program will be much more complicated than Lyft, because it’s going to be a lot more drivers and countries with different laws on securities, and it will run in the millions of dollars, one of these people said.

For drivers in the overseas markets, where the securities laws prohibit the purchase of shares, the keeping of the money will be their only option, one of the sources said.

The cash bonuses are awarded on a sliding scale on the basis of the driver’s duration of employment and the number of trips or deliveries, this person said. The goal numbers and the deadline to meet these goals are still being worked out and will be set prior to the IPO.

Stock prices often pop after trading begins, making for a lucrative payday for the shareholders who are able to buy at the IPO price. However, many drivers are likely to hold the cash, said Harry Campbell, the creator of the Rideshare Guy blog and podcast, who gives advice to directors.

FILE PHOTO: An illuminated sign is displayed in a Lyft ride-hailing car in Los Angeles, California, USA, 21 September 2017. REUTERS/Chris Helgren/File Photo

“Most drivers are on a fairly tight budget, so I think it’s tempting for them to take the bonus in cash,” he said.

Uber last year, sent a letter to the us Securities and Exchange Commission asking for a rule change, so that the company could award shares to directors while it is still in private ownership. Such programs had already been problematic in the past. New York-based ride-hailing startup Juno promised equity to the drivers, who drew SEC scrutiny. Juno ended the lapse of the own program, after it was adopted, in which a process of drivers.

Lyft is expected to be valued at between $20 billion and $ 25 billion in the initial public OFFERING of the current $15 billion valuation. Uber is seeking a valuation of up to $120 billion, an increase of $76 billion valuation in the private market.

Reporting by Heather Somerville in San Francisco; Additional reporting by Aparajita Saxena in Bengaluru and Liana Baker in New York; Editing by Saumyadeb Chakrabarty and Matthew Lewis

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