$110m for Tumblr founder to stay at Yahoo

2013-08-09 11:18

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San Francisco - Yahoo's recently completed acquisition of internet blogging service Tumblr includes a $110m 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 on Thursday is part of the windfall that Karp and Tumblr investors realised by agreeing to sell the service for $1.1bn 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% 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 on Thursday to get the $110m retention payment.

The payment will consist of $70m in stock and options and $40m in cash, according to Yahoo's filing.

The documents also disclosed that Yahoo paid a total of $44m to buy six other companies during the three months ending in June. All told, Yahoo paid about $1.15bn 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.

- AP
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