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How Yahoo Plans To Hold Onto Tumblr's Founder David Karp

He has a whopping retention package of more than $80 million for staying at Yahoo. The catch: it keeps him locked up for at least four years.

Posted on August 8, 2013, at 7:20 p.m. ET

Mark Lennihan / AP

Tumblr's founder David Karp is going to have to stick around at Yahoo, the company that bought Tumblr for $1.1 billion, for at least four years if he's going to get his full payout.

In a filing with the Securities and Exchange Commission today, Yahoo revealed most of the details about the Tumblr transaction. Karp is going to have to stick around a while at Yahoo if he's going to get an even larger payout. There's $41 million in unvested restricted stock units and common stock, as well as an extra $40 million cash consideration, under the assumption he stays at Yahoo for four years, according to the filing.

Some other juicy bits from the filing: Tumblr had slightly more than $16 million in the bank when Yahoo bought the company. Also, according to Yahoo, about three quarters of the billion-plus acquisition price is considered "good will," which basically means how valuable Yahoo thinks the company can be and what its potential is for Yahoo proper. Yahoo consider's Tumblr's "customer contracts and related relationships" to be worth nearly $200 million.

Still, based on Karp's ownership of Tumblr prior to the acquisition he's on track to get about $250 million from the deal — which is more than enough money to keep most entrepreneurs satisfied even with Yahoo's significant retention package dangling in front.

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