Opendoor Technologies is making a significant move with the appointment of Kaz Nejatian as its new CEO, underpinned by a bold compensation structure that could yield up to $2.78 billion for him, while granting him nearly 12% ownership of the company. This move comes amid expectations that Nejatian will dramatically increase the company’s share price, given that it has been viewed by some as a volatile, meme-driven stock.
Nejatian will not be alone in this endeavor, as he will be supported by the company’s founders, Eric Wu and Keith Rabois of Khosla Ventures, who are returning to the board. Wu previously led Opendoor as CEO from 2013 until 2022, and Rabois adds considerable expertise as the chairman, having served on various other notable boards including Reddit and Yelp. Their re-entry is framed by Opendoor as an initiative to restore the “founder DNA and energy” that the company aims to capitalize on during Nejatian’s tenure.
To bolster trust and investment confidence, Khosla Ventures and Wu have reportedly infused $40 million into Opendoor through a private equity purchase. This strategic capital injection coincides with a notable leadership reshuffle, marked by the exit of directors Pueo Keffer and Glenn Solomon.
In a press release announcing his appointment, Opendoor revealed its intention to adopt a “founder mode” approach. Rabois expressed enthusiasm for Nejatian’s leadership, stating, “Literally there was only one choice for the job: Kaz.”
The unconventional nature of Nejatian’s compensation package marks Opendoor’s shift away from typical CEO remuneration structures, focusing instead on hefty equity awards contingent upon stock performance. Nejatian, who transitioned from his role as COO at Shopify, is set to receive two immediate awards: a $15 million cash payout and another $15 million in restricted stock units. Both awards will vest within nine months.
His performance-based incentives introduce a significant challenge; he could potentially earn 40.9 million shares contingent on maintaining a stock price above $6.24 for a designated period. Following Nejatian’s appointment, Opendoor’s stock saw a remarkable surge of over 78%, rising to $10.49. However, in June, shares were priced around just 56 cents each.
Nejatian’s second performance award is ambitious, featuring stock price milestones ranging from $9 to $33, with vesting tied to successfully reaching these targets. If he accomplishes this, it could lead to a substantial total compensation package valued at $2.78 billion, along with a commanding 11.6% ownership stake in the company—double what Wu held when Opendoor went public via a SPAC in 2020.
Analysts note that Opendoor’s strategic gamble on Nejatian strongly signals their belief in his capacity to navigate the company towards growth and innovation. The design of his pay structure mirrors that of other tech CEOs, notably at companies like DoorDash and Airbnb, which similarly linked significant compensation to aggressive stock price goals.
Nejatian’s base salary seems notably modest at just $1, in stark contrast to the previous CEO Carrie Wheeler, whose package included a base salary of $750,000, a cash bonus, and substantial stock awards totaling $25 million before her departure in mid-August.
In response to his new role, Nejatian articulated a vision to simplify and enhance the home buying and selling experience, leveraging artificial intelligence as part of the company’s futuristic approach. He emphasized that few events in life are as crucial as real estate transactions and signaled his determination to innovate in this space.
