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Tumblr Founder Karp To Receive $81 Retention Payment From Yahoo Sale

Yahoo recently finished its acquisition of Tumblr, an Internet blogging service, and with the acquisition is a $81 million payment to David Karp, the founder of Tumbler. The catch? He must continue working for the company for the next four years.

The retention payment, which was made public on Aug. 8, was part of the windfall the Tumblr investors and Karp recognized by selling its service for $1.1 billion back in May.

Karp, 27, began Tumblr in 2007, several years after he quit high school to place his attention on computer programming.

Marissa Mayer, CEO of Yahoo, Inc., said she doesn’t want to make any drastic changes to the blogging service so that existing users won’t feel alienated by the acquisition. Many of Tumblr’s users are teenagers and young adults.  Mayer, in her promise not to mess things up with Tumblr, agreed to keep Karp running the helm in New York. Yahoo’s headquarters are in Sunnyvale, Calif.

Karp is thought to have about 25 percent stake in the blogging service, meaning he may already have received monies from the sale. However, according to the provision, he must stay with the company until June 2007 if he is to get the $81 million retention payment – $41 million of which is in stock and $40 million will come in the form of cash.  An additional $29 million in stock options and limited stock is being handed to other unknown Tumblr employees during the next four years.

In three months, and ending in June, Yahoo has paid $44 million total to purchase six additional companies. In the first half of 2013, the company has purchased 10 companies, which also included Tumblr.

Since June’s end, Yahoo has purchased many startup companies. However, deal prices are likely to be released to the public in either October or November.

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Posted by on Aug 9 2013. Filed under Business, New. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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