(Bloomberg) -- Credit Karma Inc., a fintech company being acquired by Intuit Inc., cut the compensation of all its employees in response to the coronavirus pandemic and faltering economy, according to people familiar with the matter.
The startup’s workers will take pay cuts based on seniority, starting at 15% and rising to 50% for executives, said the people, who weren’t authorized to speak publicly about the changes. Management announced the decision during a virtual all-hands meeting Thursday morning.
Executives said Credit Karma would be moving to Oakland, California, from San Francisco once its offices reopen, some of the people said. They also announced a freeze on promotions. Employees who don’t want to take the pay cut or work in Oakland are eligible for what executives on the call dubbed a “getting off the bus” buyout plan with six weeks’ salary, one of the people said.
“In this challenging economic environment our priorities remain the same -- supporting our employees and supporting our members,” a Credit Karma spokeswoman said in an emailed statement.
Credit Karma agreed in February to sell itself to Intuit for $7.1 billion in cash and stock. At the time, the companies said they expected the deal to close in the second half of 2020, subject to regulatory approvals. The termination fee for the deal is as much as $350 million, according to Intuit.
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Credit Karma has garnered more than 100 million users since it was founded in 2007 by providing free credit scores online. The startup offers other services, including the ability to apply for a credit card, find an auto loan and open a savings account.
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More than 30 million users log into Credit Karma every week, the company has said. These people don’t pay the company for any of its services, and Credit Karma makes money through an affiliate fee it receives when someone successfully applies for a loan or credit card on its platform. Credit Karma generated almost $1 billion in unaudited revenue last year, up 20% from 2018, Intuit said earlier this year.
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