Here's what Yahoo just told all its employees about the $5 billion Verizon deal

From potential layoffs to the treatment of stock options, there are tons of questions inside Yahoo in the wake of its recently announced deal to sell itself to Verizon for $4.8 billion.

On Monday, Yahoo tried to answer some of the questions among its employees, with several lengthy FAQs that it distributed internally (and then filed with the SEC).

Here’s what Yahoo is telling its employees about the big acquisition:


EMPLOYEE INTERNAL FAQ

Q. Does the announcement have any immediate impact on my job?

A. No. The transaction is not expected to close until Q1 2017.

Q. Does the announcement mean any immediate changes to my current employment benefits?

A. No. At this time, your employment benefits are unchanged.

Q. When the transaction closes, will all Yahoo part-time and full-time employees as of the transaction close date be employed by a Yahoo subsidiary acquired by Verizon (collectively, “Verizon”)?

A. Yes. All part-time and full-time employees as of the transaction close date will be employed by Verizon following the closing.

Q. Will there be layoffs between now and the transaction closing?

A. At this time, Yahoo is not planning any layoffs in anticipation of the transaction closing. Prior to the transaction closing, we will continue to operate our business independently, focus on achieving our corporate goals and manage employee performance in the ordinary course of business.

Q. Will there be layoffs after the transaction closes?

A. That is a decision for Verizon. However, you will remain eligible for the severance benefits that apply to you described in Yahoo’s Change in Control Employee Severance Plan for a period of 12 months (24 months in certain international jurisdictions) after the transaction closes. More information about the company’s Change in Control Employee Severance Plan is available on Backyard at yo/coc.

Q. Does the announcement mean that a Change In Control has occurred under the Change in Control Employee Severance Plan?

A. No. For purposes of the plan, a Change in Control has not occurred as a result of the announcement, but a Change in Control will occur when the transaction closes. More detailed information about the company’s Change in Control Employee Severance Plan is available on Backyard at yo/coc.

Q. Will I still be covered by Yahoo’s Change in Control Employee Severance Plan?

A. Yes, you will continue to be eligible for the severance benefits that apply to you described in Yahoo’s Change in Control Employee Severance Plan for a period of 12 months (24 months in certain international jurisdictions) after the transaction closes. More information about the company’s Change in Control Employee Severance Plan is available on Backyard at yo/coc.

Q. Does Yahoo plan to offer severance benefits to employees who voluntarily resign?

A. No.

Q. What will happen to my base compensation and employment benefits after the transaction closes?

A. The purchase agreement provides that for the first 12 months after the transaction closes, Verizon will provide you with the following:

A base salary or base wage rate (as applicable) and annual cash bonus opportunities that are no less favourable to you than what is in effect immediately prior to the transaction closing;
Equity incentive compensation opportunities that are no less favourable than those provided to a similarly situated employee of AOL, Inc.; and
401(k) benefits (where applicable), medical benefits and other welfare benefits that are no less favourable, in the aggregate, than those provided to a similarly situated employee of AOL, Inc.

AOL offers health and wellness benefits and a 401(k) Savings Plan with a match. The following is general list of the employee benefits programs that are offered to AOL US employees in 2016. You will receive details about the AOL programs as we get closer to the closing of the transaction.

Medical/Prescription Insurance
Health Care Flexible Spending Account
Dependent Day Care Flexible Spending Account
Dental Insurance
Vision Insurance
401(k) Savings Plan with Matching Contributions
Life Insurance
Disability Insurance
Paid Holidays
Vacation
Sick Time
Maternity Leave
Parental & Bonding Leave
Adoption Assistance
Tuition Assistance
Employee Assistance Plan
Commuter Assistance
Verizon Employee Discount Program

Please note that final details of your post-close benefits have yet to be determined and may depend on many factors, including the transaction close date and your work location. In locations where it is legally required, appropriate information and/or consultation will occur before any decisions are made with respect to employment terms.

Q. Will my Yahoo tenure carry over to Verizon for purposes of calculating years of continuing service?

A. Yes.

Q. I am on a sales commission plan — will this same plan continue to apply to me after the transaction closes?

A. That has not yet been determined. Verizon and Yahoo will discuss potential integration plans (including sales plan structures) between now and closing. In locations where it is legally required, appropriate information and/or consultation will occur before any decisions are made with respect to employment terms.

Q. Will Yahoo’s 2017 benefits open enrollment process occur in Q4 2016?

A. Yes.

Q. If the transaction closes after 2017 has already started, does that mean my medical benefits may change mid-year?

A. The purchase agreement provides that for the first 12 months after the transaction closes, Verizon will provide each employee with 401(k) benefits (where applicable), medical benefits and other welfare benefits that are no less favourable, in the aggregate, than those provided to a similarly situated employee of AOL, Inc. At this time, we are announcing no changes to post-close medical or other benefits. In locations where it is legally required, appropriate information and/or consultation will occur before any decisions are made with respect to employment terms.

Q. What about Yahoo’s other benefits and workplace perks? Will those continue after the transaction closes?

A. At this time, your employment benefits and workplace perks are unchanged. The purchase agreement provides that for the first 12 months after the transaction closes, Verizon will provide each employee with 401(k) benefits (where applicable), medical benefits and other welfare benefits that are no less favourable, in the aggregate, than those provided to a similarly situated employee of AOL, Inc. At this time, we are announcing no changes to post-close employment benefits and/or workplace perks. In locations where it is legally required, appropriate information and/or consultation will occur before any decisions are made with respect to employment terms.


Q. If I begin a leave of absence (including New Child Leave or 5-Year Leave) before the transaction closes but it is scheduled to end after the transaction closes, what happens?

A. On the transaction close date, you will continue to be employed by the same entity that employed you immediately prior to the transaction close date (although that entity will be owned by Verizon on and after the close date), subject to the previously approved terms of your existing leave of absence.

Q. How will this announcement affect my eligibility for a 2016 YIPEE bonus?

A. It won’t. 2016 YIPEE bonuses will be calculated and paid based on Yahoo’s 2016 financial performance and management’s assessment of group and individual factors as specified in the YIPEE bonus plan document.

Q. How will the transaction impact my Yahoo Shares?

A. If you own Yahoo shares as of the closing, you will continue to own shares of Yahoo (which will have changed its name to a yet-undetermined name, but which we refer to in these FAQs as “RemainCo”) post-closing. There will be no change.

Q. What will happen to my Yahoo stock options when the transaction closes?

A. Each Yahoo unvested stock option outstanding immediately prior to the closing of the transaction will become fully vested as of the closing. The number of options and the exercise price will not change. All options will remain exercisable for stock of RemainCo for 90 days following the closing. Options not exercised within that 90-day period will terminate. So if pre-closing, you have 100 vested options with an exercise price of $15 and 50 unvested options with an exercise price of $20, then post closing you will have 150 vested options, 100 with an exercise price of $15 and 50 with an exercise price of $20.

Q. I still hold Yahoo stock from the Employee Stock Purchase Plan or “ESPP”. Will those Yahoo shares convert into Verizon shares?

A. No. If you are holding shares of Yahoo stock, you will continue to own shares of RemainCo post closing. There will be no change.

Q. What will happen to my Yahoo RSUs when the transaction closes?

A. In general, a Verizon cash-settled RSU award will be substituted for each Yahoo RSU award that is unvested and outstanding immediately prior to the closing of the transaction, provided that, the number of RSUs subject to the Verizon RSU award will change to reflect the relative prices of Yahoo and Verizon stock. Your vesting schedule and other terms and conditions will remain the same.

The value of your unvested Yahoo RSUs just before the closing will be the same as the value of your unvested Verizon RSUs just after the closing. But the number of RSUs will change to reflect the relative prices of Yahoo and Verizon, as shown in the example below.

Yahoo Stock

Before

Closing

Verizon Stock

After

Closing

Notes:

Stock Price

$ 40 $ 50 Adjustment Ratio: 40/50 = 0.8

Number of RSUs

1,000 800 1,000 × 0.8 = 800

Total RSU Value

$ 40,000 $ 40,000

$40,000 = 1,000 × $40 (before)

$40,000 = 800 × $50 (after)

For purposes of calculating the adjustment ratio, (1) Yahoo’s stock price before the closing will be the volume weighted average price of a share of Yahoo common stock trading on Nasdaq over the three trading days immediately preceding the day before the closing date; and (2) Verizon’s stock price after the closing will be the volume weighted average price of a share of Verizon common stock trading on the New York Stock Exchange over the first three trading days after the closing date.


Verizon RSUs will generally be settled in cash rather than stock. This means that when your Verizon RSUs vest, for each vested RSU you will receive the value of a Verizon share in cash (based on the market value of Verizon shares on the vesting date) rather than receiving an actual share of stock. All payments will be subject to any applicable tax withholding.

Q. Will I be eligible for consideration of future equity incentive compensation grants from Verizon?

A. The purchase agreement provides that for the first 12 months after the transaction closes, Verizon will provide equity incentive compensation opportunities that are no less favourable than those provided to a similarly situated employee of AOL.

Q: Will my manager change before or after the transaction closes?

A. At this time, we are announcing no personnel changes. Prior to the transaction closing, we will continue to operate our business independently and focus on achieving our corporate goals. Verizon and Yahoo will discuss potential integration plans (including reporting structure) between now and closing.

Q. Does this announcement mean any immediate changes to Yahoo’s performance review / QPR processes?

A. We are announcing no changes.

Q. I am a visa holder. What happens to my visa status? Will Verizon continue to support my visa?

A. There are currently no changes to your visa status — Yahoo will continue to sponsor employees requiring work authorization prior to the transaction close date. During this time, Yahoo will also work with Verizon to minimise any disruption to visa holders.

Q. I have an application for a Green Card (permanent U.S. resident) with Yahoo as the employee sponsor. With the news, will Verizon honour that sponsorship or will I have to start over?

A. There are currently no changes to your application process — Yahoo will continue to sponsor employees with pending Green Card (permanent U.S. resident) applications prior to the transaction close date. During this time, Yahoo will also work with Verizon to minimise any disruption to employees in the Green Card (permanent U.S. resident) application process.

Q. Does this announcement affect my ability to explore job opportunities on other teams?

A. No. We continue to support the growth and development of our employees by considering internal candidates for any open positions.

Q. Is Yahoo still hiring prior to the transaction close?

A. Generally, yes.

Q. Are Yahoo employees eligible for promotions prior to the transaction close?

A. Generally, yes.

Q. Will Yahoo be moving or closing offices?

A. At this time, we’re announcing no changes. Prior to the transaction closing, we will continue to operate our business independently from Verizon and focus on achieving our corporate goals. Verizon and Yahoo will discuss post-close integration plans between signing and closing.

Q. What if I have additional questions?

A. Please add your question(s) to the moderator yo/futuremod. We may update yo/future as we have additional information.

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