Taxi hailing apps Uber and Lyft are planning to give thousands of its contract drivers cash bonuses to help purchase stock in their forthcoming initial public offerings (IPO), The Wall Street Journal has reported.
The cash bonuses can be either used by the drivers to invest in IPO or they can also choose to simply keep the money.
Due to regulatory restrictions by Securities and Exchange Commission, ride-sharing companies cannot grant stock to their drivers. As per SEC rules, private company are barred from granting stock shares to contractors, who technically aren’t considered full-time employees.
The cash bonus plan by Uber and Lyft is seen as a way to circumvent these restrictions.
According to the WSJ report, Uber is working out the details of a program that will grant cash awards based on a sliding scale related to the driver’s length of service and number of trips or deliveries. The cash bonus plan is expected to cover significant portion of its 3 million active drivers and couriers associated with the company.
Lyft is planning to give drivers who have completed 10,000 rides $1,000, either in cash or put towards IPO share purchase, while drivers with over 20,000 rides will get $10,000.
Lyft expects only a minority of its drivers to be eligible under this program.
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