Microsoft’s purchase of LinkedIn for $26.2 billion was big news, but The New York Times has theorized a non-public reason for the sale: LinkedIn’s compensation problems.
It seems that LinkedIn gave a huge percentage of its compensation in stock. While many people enjoy this-if the company you work for does well, you can have a sweet retirement-if the company does poorly, it can be a huge problem.
That’s what happened at LinkedIn. According to the NYT:
On one grim day in early February, LinkedIn’s stock price plummeted more than 40 percent after it forecast weaker-than-expected growth for the year. The share price had hovered at $225 at the beginning of 2016; a month later it briefly got close to $100.
You can see why this might be a problem for employee retention. Employees freak out if the don’t get a yearly 3 percent increase. You can imagine how top talent isn’t willing to stick around in a company that just slashed their compensation.
To keep reading, click here: What’s Behind LinkedIn’s Big Compensation Problem