Yahoo Will Pay Tumblr Founder David Karp Up To $US110 Million To Stick Around For 4 Years

David KarpBloomberg/Charlie RoseTumblr founder David Karp

Tumblr founder David Karp says that he didn’t expect to sell his company to Yahoo, or sell it at all, this year. He says he was motivated to sell because Yahoo would give Tumblr
a “shortcut” to “all the very hard things” Tumblr had to learn in order to grow.

But on Thursday Yahoo revealed another pretty good carrot to get Karp to sell: Yahoo will pay him $US110 million in cash and stocks if he stays with the company for four years. So it said in a form filed to the SEC, and spotted by AllThingsD’s Peter Kafka.

Specifically, he gets unvested stock options and restricted stock units valued at $US29 million, Yahoo common stock valued at $US41 million and $US40 million cash. It averages out to $US27.5 million a year.

Here’s the the relevant paragraph from the SEC form.

“In connection with the acquisition, the Company is recognising stock-based compensation expense of $US70 million over a period of up to 4 years. This amount is comprised of the assumed unvested stock options and restricted stock units, valued at $US29 million, and the Yahoo! common stock, valued at $US41 million, issued to Tumblr’s founder but subject to holdback and release over four years provided he remains an employee of the Company. In addition, the transaction resulted in contingent cash consideration of $US40 million to be paid to Tumblr’s founder over 4 years provided that Tumblr’s founder remains an employee of the Company. Such cash payments will be recognised as compensation expense over the 4-year service period. ”

Compare that to another fact Yahoo also revealed: Tumblr had $US16.6 million in the bank when Yahoo bought it. It had raised $US125 million total, including an $US85 million round in 2011, according to Crunchbase. So it had burned through quite a bit of cash when Yahoo came calling.

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