SAN FRANCISCO Yahoo's recently completed acquisition of Internet blogging service Tumblr includes an $81 million payment to Tumblr founder David Karp as long as he remains on the job for the next four years.
The retention payment disclosed in a regulatory filing Thursday is part of the windfall that Karp and Tumblr investors realized by agreeing to sell the service for $1.1 billion in May. Karp turned 27 last month. He started Tumblr in 2007, a few years after he dropped out of high school in New York to concentrate on computer programming.
Yahoo Inc. CEO Marissa Mayer has pledged not to make any dramatic changes at Tumblr in hopes that the acquisition won't alienate the blogging service's existing users, which includes a substantial number of teenagers and young adults. As part of her promise "to not screw it up," Mayer is allowing Karp to run Tumblr independently in New York. Yahoo is based in Sunnyvale, Calif.
Karp is believed to own a 20 to 25 percent stake in Tumblr, which means he probably has already received a windfall, which hasn't been disclosed, from the sale to Yahoo. But he must stay at Tumblr until June 2017 under the provision disclosed Thursday to get the $81 million retention payment. The payment will consist of $41 million in stock and $40 million in cash, according to Yahoo's filing.
Another $29 million in stock options and restricted stock is being doled out to other unnamed Tumblr employees over four years. The documents also disclosed that Yahoo paid a total of $44 million to buy six other companies during the three months ending in June. All told, Yahoo paid about $1.15 billion to buy 10 companies, including Tumblr, during the first half of the year. Yahoo has bought several other startups since the end of June. The prices for those deals are likely to be disclosed in another regulatory filing in October and November.