One Possible Reason Why Publicis Won't Honor Razorfish Stock Options

(MoneyWatch)  Razorfish employees transferring from Microsoft to Publicis in the latter's $530 million acquisition of the digital shop will lose 75 percent of their unvested stock options, according to Ad Age. Obviously, staff there are angry:

"It's a slap in the face," said one staffer. "There are a lot of people here talking to lawyers. Some of them blame Publicis."

The Age story suggests it's something to do with the difference in "culture" between tech startups (who often pay in stock) and old school ad agencies, (who don't). Perhaps. Or possibly it's because Razorfish isn't profitable, and hasn't been for a while. When CEO Maurice Levy announced the deal, he said Razorfish made as much money as Digitas. That turned out not to be true, when Microsoft revealed that in fact the shop was a money-loser.

If Publicis were to honor those options in full, it would have to incur the expense, further reducing Razorfish's profitability, and Publicis', and possibly adding some extra liabilities to the balance sheet. Given that revenues at Publicis are currently sinking, the prospect of adding a bundle of extra expenses to the operation due to a non-profitable acquisition can't have looked very appealing.

• Previously:
• Publicis Numbers on Razorfish Acquisition Don't Add Up
• Recovery Ahead? Publicis, Omnicom Are Positive While WPP, IPG Stay Cautious
• Publicis Plays Catch-Up With Unilever Mag Acquisition; Operating Leverage is Key
• After Publicis' Acquisition of Razorfish, Might ValueClick Be Next?
• Publicis Boss Levy Admits 1,800 Were Laid Off
• Publicis Q2: We're Shocked - Shocked! - to Find There's a Recession Going On!
• Why Publicis May Beat WPP to Razorfish