Spotify has carried out its largest round of layoffs ever Jonathan Raa/NurPhoto via Getty Images
Spotify’s chief financial officer, Paul Vogel, can now claim to be the most high-profile victim of the 1,500 workers laid off after Spotify said it needed a different direction at the top of its finance department.
However, his exit is well cushioned after he liquidated $9.4 million worth of shares on Tuesday at an average price of nearly $196 per share, according to a regulatory filing from the Swedish company.
The day before, investors made an offer to buy Spotify after learning that the streaming service was planning its largest-ever workforce cuts.
“We have concluded that Spotify is entering a new phase and needs a CFO with a different mix of experience,” founder and CEO Daniel Ek said in a statement on Friday, noting that it is balancing spending and investments more carefully must .
The Stockholm-based global audio streaming leader said it has launched an external search for Vogel’s successor, who is expected to leave the company at the end of March.
It’s unclear whether he has already been relieved of his duties, as Spotify said its vice president of financial planning and analysis, Ben Kung, will take on expanded responsibilities in the interim.
When reached by AssetsThe company declined to comment further on the circumstances or motivation behind Vogel’s dismissal or what it means for the immediate future.
Spotify has lost its ingenuity
The CFO reshuffle comes after Ek announced the company’s biggest layoffs ever, seeking to return to its roots as a lean and fierce underdog when it punched above its weight and could do more with less.
News that Spotify would lay off one in six employees after the company has already thinned its workforce twice this year sent shares up a total of 10% in the first two trading sessions.
Vogel wasn’t the only one who benefited directly from the layoffs either.
The company’s lawyer, Eve Konstan, and an independent director on the board also sold more than $1.1 million and $521,000 worth of shares, respectively, after the price had already risen.
Insiders like Ek selling $100 million worth of stock in July can rarely be seen as a reassuring sign for investors, but it is particularly damaging when the timing is poorly judged.
In Vogel’s case, the optics of making money immediately after many of his colleagues learned they would lose their jobs seem questionable, although completely legal.
As painful as the company-wide layoffs were, Ek said he took personal responsibility for wielding the ax after his management team initially debated a more measured approach to job cuts.
In a letter to staff this week, Ek expressed concern that the company had lost its ingenuity at a time when the cost of raising capital for growth was reaching dizzying heights.
Companies like Spotify that need to raise funding – whether by issuing new shares or debt – can expect to pay a hefty premium when Wall Street can make 4% or more risk-free just by lending to the U.S. government .
However, how Spotify can best be financed economically under these more difficult conditions is no longer an issue for Vogel, as this task now falls to his successor.
“We look forward to attracting a strong financial leader as our next CFO,” Ek said.