Opendoor Technologies is going all in on new CEO Kaz Nejatian with an aggressive compensation package that could see him clear $2.78 billion and own nearly 12% of the company. But he’ll have to do more than triple the share price of a real estate technology company some have deemed a buzzy meme stock.
In the meantime, Nejatian will have Opendoor’s founders—Eric Wu and Khosla Ventures’ Keith Rabois—overseeing him on the board. Wu served as Opendoor’s CEO from 2013 to 2022 and chaired the board from 2020 to 2022. Rabois, who served on the boards of Reddit and Yelp and currently serves on the board of Ramp, was appointed chairman. Both are returning to Opendoor to bring back “founder DNA and energy,” the company announced. They’ll also inject capital; Khosla Ventures and Wu invested $40 million of equity capital into Opendoor through a private purchase. Meanwhile, two other directors, Pueo Keffer and Glenn Solomon, have stepped down in a significant leadership shuffle.
In a press release, Opendoor said it was “going into founder mode” with Nejatian’s appointment and in luring Rabois and Wu back with seats on the board and new financing.
“Literally there was only one choice for the job: Kaz,” said Rabois in a statement. “I am thrilled that he will be serving as CEO of Opendoor.”
Nejatian’s pay package will see Opendoor turn away from traditional CEO compensation plans in favor of a return to massive equity awards tied entirely to stock price performance, according to his offer. Nejatian left his role as chief operating officer at Shopify to join Opendoor, and he’ll get two “make-whole” awards from his new bosses. The first is a $15 million cash award, and the second is a $15 million restricted-stock unit award. Both vest in nine months.
Nejatian, who previously cofounded a payment tech company called Kash, will also get two performance-based awards. The first award of 40.9 million shares is basically designed around ensuring that shareholder value isn’t eroded, said Farient Advisors vice president Eric Hoffmann. The shares vest in installments over five years with a stock price gate of $6.24, which means the stock has to maintain an average closing price of $6.24 or higher over a 60-day period for vesting to take place. Opendoor’s stock surged more than 78% on Thursday following Nejatian’s appointment to $10.49, but in June, the stock hovered around 56 cents a share.
The second performance award is designed like a moonshot with seven stock price hurdles ranging from $9 to $33. The tranches only vest when the stock hits price milestones of $9, $13, $17, $21, $25, and $33.
If Nejatian can hit all those price targets, he’ll be rewarded with compensation valued at $2.78 billion—and he’ll own 11.6% of the company, double the stake Wu held when Opendoor went public through a SPAC in 2020, Hoffmann told Fortune.
“What I find interesting is that they clearly believe that this guy, who was the COO at Shopify, is going to make or break this company,” said Hoffmann. “They are willing to make a very large bet and put a lot of power and money into his pocket to get him on board and motivated to grow and drive the company forward.”
Nejatian’s package is similar to that of other CEOs at tech companies with hefty stock price growth goals, said Farient’s senior data analyst, Claire Kamas. Similar plans were in place at online delivery platform DoorDash and Airbnb after they went public, she added.
When Wu served as CEO, the company had a similar structure, noted Hoffmann, although Wu’s price milestones were higher at $18.11, $23.54, $30.60, $39.78, $51.71, and $67.23. He hit the first milestone before resigning in 2022. The Opendoor board replaced him with Carrie Wheeler, who had been the chief financial officer. Wheeler stepped down on Aug. 15.
Wheeler’s pay package included a base salary of $750,000 plus a cash bonus of $250,000, and she was awarded restricted stock valued at $25 million.
Nejatian, conversely, will have a base salary of $1 and no bonus.
“It’s a privilege to become Opendoor’s leader,” said Nejatian. “Few life events are as important as buying or selling a home. With AI, we have the tools to make that experience radically simpler, faster, and more certain. That’s the future we’re building.”
