Nice to have options
“We are being intentional about creating liquidity events.”
Blue Origin moved the rocket for its third New Glenn launch to the pad this weekend. Credit: Blue Origin
Blue Origin moved the rocket for its third New Glenn launch to the pad this weekend. Credit: Blue Origin
Blue Origin released details about a new stock option plan in an internal communication on Tuesday.
Ars was able to review the materials and connect with some employees to gather their thoughts. Some of the early reviews are not positive, with one employee going so far as to describe the plan as “pure f—king trash.” And it’s not hard to see why some people feel gun-shy or disillusioned. The company’s previous stock plan, which ended up being essentially worthless, fostered a lack of trust.
However, a careful reading of the new documents, compared to the original plan, indicates that it has a more serious intent. It is set up in a similar manner to other stock option plans in the industry. If Blue Origin founder Jeff Bezos genuinely wants to course correct from Blue Origin’s initial stock plan—to right the wrongs perceived by his employees—this could be a vehicle for that.
And it is important for Bezos to get this right. Blue Origin is revamping its stock option program at a critical time for its operations, seeking to ramp up the launch cadence of its New Glenn rocket program and compete with SpaceX to build a lunar lander for NASA’s Artemis Program. Blue Origin needs its workforce bought in for demanding days ahead.
There is also the not inconsiderable matter of SpaceX’s impending initial public offering, which will instantly make thousands of employees of Elon Musk’s company millionaires and give them a legitimate chance to cash in their options.
A lot of people at Blue Origin feel strongly about the company and its mission, but many have a fear of missing out when it comes to life-changing wealth being accrued by their peers.
“There is no guaranteed timeline”
A little more than a month ago, as Ars was reporting a lengthy feature on Blue Origin’s lackluster original stock options program, the company announced a replacement plan. As part of this announcement, Blue Origin chief executive Dave Limp promised at a company-wide meeting on April 17 to offer more information about the new plan.
This meeting date subsequently populated the online calendars of employees until Monday, when it was canceled. Limp sent an email to employees on Monday saying the town hall would be held at a later date because much of the company was focused on the upcoming third launch of New Glenn, set for no earlier than Saturday.
However, Limp also promised that more information about the new stock options plan would be shared by email soon, and this update arrived in employee inboxes on Tuesday. Among the details of the new plan, as outlined in the letter:
- “Our first grant of stock options will be awarded on May 15 at a strike price no less than Blue Origin’s fair market value at the time of grant.”
- “Each year thereafter, we expect to grant awards in March to align with our compensation planning cycle.
- “Grants will be based on level and individual performance.”
- “New hires will also be eligible, pro-rated based on their start date.”
- “Each grant will vest over four years, with 25 percent vesting at year one and 6.25 percent quarterly thereafter for the remaining three years. Grants expire 10 years from the grant date.”
- “Vested stock options can only be exercised following a qualifying liquidity event. Qualifying liquidity events can include initial public offering, sale or merger, qualifying external funding rounds, and company sponsored tender offers.”
The letter, as well as a “Blue Origin Stock Option Wiki” did not, however, answer some key questions. It does not offer any indication about what the “strike price” might be (that will come on May 15) or how Blue Origin’s “fair market value” would be determined. It is also vague on when a liquidity event (i.e., when employees could cash in their options) would occur.
On this question, the wiki says, “There is no guaranteed timeline, but we are being intentional about creating liquidity events that provide you with the opportunity to convert vested stock options into realized value, especially as the company’s cash flow strengthens over time.”
Several employees told Ars, based on this language, that they did not believe Blue Origin was serious about offering liquidity events. However, legally, Blue Origin may not be able to offer any guarantees at this time. Moreover, this plan does not seem strikingly different from most of Blue Origin’s peers in the industry in that the potential gain is not immediate, but rather in the long term, should Blue Origin deliver on its promises.
Smart aerospace engineers and capable technicians have plenty of places to work, especially along Florida’s bustling space coast where Blue Origin is building its New Glenn rockets and Blue Moon landers. It’s not just SpaceX that is offering stock options. For employees who may not like the politics of SpaceX founder Elon Musk or its demanding work schedules, there are other promising startups, such as Stoke Space or the recently revitalized Relativity Space.
If this new plan is meaningful, as senior leaders are telling the workforce they intend it to be, it could allow Blue Origin to better compete for and retain top talent. But clearly Limp and Bezos are going to face some healthy skepticism, and clear communication with employees will be essential. The cancellation of the April 17 Town Hall probably did not help this perception.
Ultimately, this will come down to the intent of Bezos
The plan makes little mention of the implications for current and former employees who hold options in Blue Origin’s original stock option plan. The company stopped issuing those options in 2023, and they are expiring over time.
There is also bad news for managers in the new plan. As part of the new changes Blue Origin is phasing out its “Annual Incentive Plan,” or AIP, essentially a sizable bonus paid each year based on the company’s performance measured against various targets.
The company said it would make final AIP payments next March and that a “portion” of these payouts would be rolled into the base pay. It seems plausible that this money, previously spent on AIPs for select managers, would instead be directed toward the new stock plan for all employees.
Because Blue Origin is still a long way from profitability, any “stock option” plan returns in the short term will require one of two things to happen. Either Bezos will have to dig deeper into his fortune to create an artificial market for these options (such as buying them back), or Bezos is going to have to decide that he is willing to take on other investors and convince them there is real value in Blue Origin.
Either way, he will either have to spend more—when he is already investing billions of dollars into Blue Origin annually—or give up some control over a project he has described as the most important thing he will undertake in his lifetime.
Eric Berger is the senior space editor at Ars Technica, covering everything from astronomy to private space to NASA policy, and author of two books: Liftoff, about the rise of SpaceX; and Reentry, on the development of the Falcon 9 rocket and Dragon. A certified meteorologist, Eric lives in Houston.
