It's not bad being David Karp, the 27-year old founder of Tumblr, who is set to earn a bonus of $81 million in addition to his salary if he stays at Yahoo! for the next four years.
Aaron Boyd, director of governance research for executive compensation data firm Equilar, said one of the reasons companies are acquired, besides the product and technology, is the talent at the acquired firm. "Obviously, Yahoo! feels it is important to keep David Karp on to ensure the success of its acquisition," Boyd said.
Apparently, Yahoo thought the $250 million Karp made from the acquisition wouldn't be enough to maintain his loyalty.
Back in May, when the acquisition of his blogging company was announced for $990 million, Yahoo promised not to "screw it up"
"Per the agreement and our promise not to screw it up, Tumblr will be independently operated as a separate business. David Karp will remain CEO. The product, service and brand will continue to be defined and developed separately with the same Tumblr irreverence, wit, and commitment to empower creators," according to a statement the company issued at the time.
At the time of the announcement, the fact that a blogging site launched in Feb. 2007 and founded by a high school dropout would be worth nearly $1 billion boggled the mind. According to a 10-Q quarterly report filed with the Securities and Exchange Commission on Thursday, Yahoo revealed that $751 million, or 75 percent, of the purchase price was attributed to Tumblr's reputation, which is known as goodwill in accounting speak.