Tumblr Founder David Karp To Get $110 Million From Yahoo Over 4-Year Period

Image via Flickr/ web09

Just David Karp got a sweet deal by selling his company, Tumblr, to Yahoo for $1.1 billion, Yahoo gives him another offer he probably could not refuse: stay with the company, and collect $110 million over the next few years.

The news comes after Yahoo made a filing with the Securities and Exchange Commission on Thursday that said it would offer Karp $70 million in stock and $40 million in cash over a 4-year period, averaging $27.5 million per year.

An excerpt from the filing reads:

In connection with the acquisition, the Company is recognizing stock-based compensation expense of $70 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 $29 million, and the Yahoo! common stock, valued at $41 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 $40 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 recognized as compensation expense over the 4-year service period.”

The 10-Q form filed by Yahoo also revealed that cash was drying up for Tumblr before the company stepped in to purchase. Of the $125 million that Tumblr raised in 2007, there was only $16 million left when the blogging company was acquired by Yahoo.

Yahoo’s purchase of Tumblr spawned some criticism within the blogging community over whether or not Yahoo would be able to maintain the culture of Tumblr that Karp cultivated for its nearly 1-billion users, most of whom are young.

Tumblr users are pretty freaked out that Yahoo folks will come in and act like the new sheriff in town,” wrote Forbes writer Steven Rosenbaum. “Overall,  some of the behaviors that Tumblr bloggers use might be looked at by Yahoo lawyers as copyright infringement.  Users point to Tumblr Fandoms and gifs as potential IP violations.  And lurking in the background is a pretty significant number of porn pages on Tumbr.”

But those worries don’t matter much, as Yahoo is committed to staying on the path that Tumblr has traveled thus far.

Per the agreement and our promise not to screw it up, Tumblr will be independently operated as a separate business,” Yahoo said in a statement.

And apparently, keeping Karp on board is a testament to that statement.