Dive Brief:
- Fintech Credit Karma, which software company Intuit agreed to buy in February for $7.1 billion, is cutting all of its employees' pay, Bloomberg reported, citing people familiar with the matter.
- The reductions, based on seniority, range from 15% for newer workers to 50% for executives, company management said Thursday in a virtual all-hands meeting.
- Management also announced a freeze on promotions and a move to Oakland, California, from San Francisco, once the company’s offices reopen.
Dive Insight:
Credit Karma employees who won't take the salary reduction or work in Oakland are eligible for a "getting off the bus" buyout plan with six weeks' pay, one source told Bloomberg.
Company executives blamed the coronavirus's effect on the economy for its move to slash compensation, the sources said. At the same time, several firms in the banking sector, including Morgan Stanley, Citi, Wells Fargo and Bank of America, have pledged not to lay off their employees for the remainder of the year.
Intuit and Credit Karma have said they expect the deal to close in the second half of this year, pending approval from regulators. The termination fee for the deal is as much as $350 million, Intuit said.
"In this challenging economic environment our priorities remain the same — supporting our employees and supporting our members," a Credit Karma spokeswoman said in a statement emailed to Bloomberg.
