Image credit: Lyft
UPDATE: This article has been updated with compensation package information for Green, Zimmer and Risher.
Lyft’s co-founders, CEO Logan Green and President John Zimmer, will step down from their roles by mid-April, the company said Wednesday. They will act respectively as chairman and deputy chairman of Lyft’s board.
David Risher, a former Amazon retail executive, will take over as CEO of Lyft. Lyft’s current chairman, Sean Aggarwal, will step down from the position but will remain on the board.
Green and Zimmer founded Lyft in 2012. At the time, the company was mainly differentiated from Uber by the presence of pink mustaches on Lyft vehicles. At the time, Zimmer told TechCrunch that Lyft had originally thought about making the service just for women, “as a safety type and a very special clientele.”
Lyft dropped its mustache in 2016 and went public three years later. When it debuted, Lyft raised more than $2 billion in an afternoon after pricing its shares at $72 each. Today, Lyft closed at $9.60 per share; However, the stock price jumped nearly 6% after hours following the news that Risher was taking over as CEO.
Risher joined Amazon in 1997 as the company’s first VP of product and store development. He rose through the ranks alongside Amazon founder and CEO Jeff Bezos, serving as SVP of marketing and merchandising before leaving Amazon in 2002. He helped transform the company from an online bookstore with $15 million in annual sales to “everything store » with over $4 billion in sales, according to a statement from Lyft.
Today, Risher is the CEO and co-founder of Worldreader, a non-profit organization dedicated to getting children interested in reading. Perhaps it’s this community-minded spirit that aligns well with Lyft’s original founding goals as a company. He will step down as CEO there and continue as board president, according to a LinkedIn post.
Risher, who joined Lyft’s board in 2021, will assume full leadership responsibility for the company’s operations on April 17, according to the company.
Lyft said there would be no change to the company’s previously announced first-quarter 2023 revenue, gross margin and adjusted EBITDA outlook. When Lyft shared its fourth-quarter and full-year 2022 results in February, the company lowered its Q1 2023 revenue expectations to $975 million, a decline of about $200 million. Analysts had expected the company to post $1.09 billion in revenue. That guidance sent shares tumbling 25% in after-hours trading to $12.13, and they have continued to fall in the intervening weeks.
According to SEC filings, Lyft pays Risher an annual salary of $725,000, with an annual target bonus opportunity of 100% of that salary for each fiscal year he is employed by Lyft, based on the achievement of certain performance goals. This year, however, his annual bonus will be $1 million as long as he stays with the company until mid-March 2024. Risher also gets a signing bonus of $3.25 million. The new CEO’s compensation package includes an award of performance-based restricted stock covering a total of 12.25 million shares, which Risher can earn upon the achievement of certain stock price targets.
Green and Zimmer will each receive $450,000 in cash for their positions on the board. They will both maintain their original award agreements on a pre-defined timeline as long as they remain service providers to the company. If they are fired, this timeline accelerates and they will receive access to the stock awards as defined in Lyft’s 2019 Stock Incentive Plan. On top of that, they will both be granted an award of restricted stock covering a number of shares of Lyft’s stock with a value of $260,000, effective as of the date of the Company’s annual meeting of stockholders.
And despite the move from day-to-day operations, Lyft’s dual-class structure empowers Green and Zimmer long after they leave the company. They both still have voting shares which entitle them to 20 votes per share until both are dead. If one dies or becomes incapacitated, Lyft’s sunset clause allows the remaining co-founder to control the votes of the deceased/incapacitated co-founder. And when they are both dead, a trustee will retain the last living co-founder’s full voting rights for a transition period of nine to 18 months.