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
Respectfully, Microsoft and, if your story is accurate, LinkedIn are made for each other. Upon hearing of the acquistion, I fully expected LinkedIn to go the way of the Zune, Kin, Courier, Windows ME, Great Plains, Windows Live, Passport and Windows Mobile.
The LinkedIn comp challenge just fits right in line.
Stock issues, reminds me of the late 80’s and 90’s when people had to work 3 jobs to cover their tax liability for being millionaires on paper…ya, we just never seem to learn.