Yesterday, Bloomberg reported that Skype had canned a bunch of senior executives and implied that the firings had been made to avoid giving the execs huge payouts when the Microsoft deal closed.The implication–that Skype’s investors had screwed the managers who got them the big Microsoft deal–understandably reverberated around Silicon Valley.
Executives at private companies like Skype count on equity as a major part of their compensation. It would set a horrible precedent if firms like Skype investor Silver Lake sacked executives before deals closed just to save themselves a few bucks by avoiding some additional stock dilution.
Well, we spoke with a current Skype investor, who says the theory that Skype fired the execs to avoid deal payouts is a bunch of crap.
The investor confirmed that several senior Skype executives had been whacked. But the investor said that saving money on the deal payouts had nothing to do with it.
Rather, the investor said, Skype’s relatively new CEO Tony Bates, who joined the company about eight months ago, had finally completed a thorough review of the company’s executive team and that he had made the changes to reflect the team he wanted going forward.
The investor stressed that Bates has to be prepared to run Skype either as a division or Microsoft or–if the deal doesn’t get the necessary approvals (the DOJ and EU still haven’t signed off on it)–as a standalone company. So he kept the managers he wanted and booted the ones he didn’t.
The investor said that the fired managers will get most of what they would have gotten if they had stayed at Skype through the deal close and management transition. The investor also said the decision to fire the executives never reached the level of the board and investors: The firings were Tony Bates’s decision, the investor said, and the investors support Tony Bates.
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