LendingClub has made its president Steven Allocca redundant and will cut its workforce as part of a restructuring plan after Covid-19 has hit its loan originations.
The board of the US peer-to-peer lending platform has approved the plan, which includes workforce reductions affecting approximately 460 employees.
Impacted employees will receive support through an employee relief plan.
In an 8K document submitted to the Securities and Exchange Commission, the board blamed the pandemic’s impact on consumers, businesses and the economy, and consequently the platform’s loans.
The plan repositions its expense base to better reflect its current loan volume and position itself for profitability when the economy stabilises, LendingClub said.
Allocca’s last day with LendingClub will be on 12 May and he is entitled to severance payments.
The platform’s top executives have agreed to temporarily cut their base salary. Named executive officers have agreed a 25 per cent drop and chief executive Scott Sanborn has agreed 30 per cent.
Additionally, the board voluntarily reduced the base cash retainer non-employee directors receive for serving on the board in 2020 by 30 per cent.
“It’s never easy to lose people who are not just colleagues, but teammates and friends,” said Sanborn.
“These are amazing, innovative, and committed people who have helped to build LendingClub into a great company.
“However, it was necessary to realign our staffing to the current business environment.
“With these actions, we believe we are well positioned to achieve our long-term strategic goals and better serve our members, who will need us more than ever, once the economy stabilises.”
In connection with the workforce reductions under the plan, LendingClub expects to incur total pre-tax restructuring and related charges of approximately $10m (£8.09m) during the remainder of the year ending December 31, 2020.
Of this approximately $1m (£0.81m) represents an employee relief plan to assist impacted employees through this challenging time and the remainder represents future cash expenditures for the payment of severance and related benefits costs.