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Skype Execs Purged On Eve of MS Takeover 300

Posted by samzenpus
from the out-with-the-old dept.
jfruhlinger writes "You might think that the executive team that engineered a lucrative buyout for their company would be rewarded. But eight execs from Skype instead found themselves fired just before their company was formally taken over by Microsoft. It appears that this move isn't meddling from Redmond; rather, the private equity firm that owns a 70 percent stake in Skype wanted to cut back on the payout to company execs that would normally accompany this kind of transaction."
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Skype Execs Purged On Eve of MS Takeover

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  • by elrous0 (869638) * on Monday June 20, 2011 @10:46AM (#36501156)

    It appears that this move isn't meddling from Redmond

    There must be SOME way I can blame this on evil Microsoft. Were the fired execs open source, by any chance?

    • by Enry (630)

      They wouldn't have been fired if MSFT didn't buy Skype?

      • by toppavak (943659) on Monday June 20, 2011 @12:33PM (#36502792)
        Yes, but it would have been possible for them to make a lot more money out of the process if they were fired afterwards. Typically stock paid to execs have to vest over a period for ex. every year 20% of your stock vests over 5 years. If the execs were not fully vested, the acquisition event would have triggered an instant vest clause and they could have cashed out on their entire package. If they were fired before the acquisition, any stock that had not yet vested would simply be lost, reducing the total amount of stock Skype had issued and increasing the value of the stock held by the equity firms. They were stabbed in the back by their own financiers- not an uncommon occurrence. It serves you well to vette the VCs you work with every bit as much as they're going to vette you.
    • I like it better like this, I would've hated to give MS credit for firing a bunch of the overpaid freeloading bastards.

    • There must be SOME way I can blame this on evil Microsoft. Were the fired execs open source, by any chance?

      It would appear so... they definitely got forked!

  • by Pope (17780) on Monday June 20, 2011 @10:48AM (#36501182)
    Always seems to be carrying a very sharp sword.
    • by ackthpt (218170)

      Always seems to be carrying a very sharp sword.

      There's always voting with your dollars, take them elsewhere - helps blunt such swords.

    • by The Great Pretender (975978) on Monday June 20, 2011 @12:01PM (#36502294)
      "It appears that this move isn't meddling from Redmond; rather, the private equity firm that owns a 70 percent stake in Skype wanted to cut back on the payout to company execs that would normally accompany this kind of transaction."

      I'll let you into a secret, they knew, probably got paid well and Microsoft were in on it.

      1) As an exec in company like this you come in with a contract that has all departure routes covered, outside being fired for cause. It's standard practice and if you didn't require it, you wouldn't be doing that job. So yes, they were made whole and that means a lot of cash, probably a chunk of equity prior to the sale.

      2) Microsoft negotiated the options for the buy out and that means assessing and pruning the management at Skype, before the sale. Skype didn't just futz with the company on the eve of the sale. Removing the folks MS don't want before the sale takes the focus off of MS for clearing out who it doesn't want. It would be a negotiated point.

      3) My guess is that these execs are M&A (Mergers and Acquisition) specialists. They were likely specifically bought in to engineer something like this. So they've done their job and they'll move on to the next.

      You don't sell/buy something for $8.5 billion and not talk about everything. Trust me, everybody knew way before now who was staying, who was leaving and how much money they were going to make.

      • by strabo (58457)

        3) My guess is that these execs are M&A (Mergers and Acquisition) specialists. They were likely specifically bought in to engineer something like this. So they've done their job and they'll move on to the next.

        Doesn't look that way, but I agree on all of your other points.

        The departures included David Gurle, vice president and general manager for Skype for Business; Don Albert, vice president and general manager for the Americas and Advertising; Doug Bewsher, chief marketing officer; Christopher Dean

  • Fired? (Score:4, Informative)

    by lymond01 (314120) on Monday June 20, 2011 @10:50AM (#36501210)

    The spokeswoman declined to say whether the eight executives were laid off or resigned.

    Someone knows something not in the linked article?

    • Re:Fired? (Score:5, Insightful)

      by eln (21727) on Monday June 20, 2011 @10:56AM (#36501326) Homepage
      At the executive level, "fired", "resigned", and "laid off" all mean the same thing. At any rate, even if they didn't have golden parachutes as part of their employment contracts (and they're idiots if they didn't), I'm sure they have plenty of stock and stock options to dry their tears with.
      • by s73v3r (963317)

        And if those options weren't vested yet?

        • by mysidia (191772) *

          Sounds like a lawsuit against the company for breach of contract....

          "Firing" execs to avoid upholding the terms, in regards to required compensation for executives in event of a buyout?

          This is not going to make things easier for that VC firm to do business going forward, after such a dirty show of dishonesty

        • Being "vested" is something for the peons and middle-level managers (and sometimes for C-level types, when it helps dodge taxes). Top execs in situations like this get the options free and clear. Of course, they don't get the Class A options, but what they do get is already vested.
    • Whole team? (Score:4, Interesting)

      by siriuskase (679431) on Monday June 20, 2011 @11:24AM (#36501762) Homepage Journal

      What matter is whether they were the whole team, half the team. or deadwood statues of the team.

      It's hard for outsiders to recognize the deadwood, and it's hard for insiders to fire their friends. Sometimes takeover time is a good time for insiders to let the outsiders clean house. Is this what happened or was the whole team let go?? This is something that an outside observer can figure just by visiting the parking lot.

      Who cares if the were laid off. They are out in either case. Unless they turned into contractors.

      • by s73v3r (963317)

        They were still part of the company, taking a risk in doing so. Should they not partake in the rewards?

      • Still kind of an asshole move at this point I think.

        "Gee Bob, you've been with the company a few years and, frankly, I've always thought you were a bit of a dim bulb. I've been meaning to fire you for years, but now that we've all worked our asses off to get this buyout to get through I think I should do it before you get your multimillion dollar bonus you've been working for."

  • are other corporate psychopaths, it's hard to feel sympathy

    • Exactamundo!
    • by DontBlameCanada (1325547) on Monday June 20, 2011 @11:12AM (#36501562)

      IMHO, the only thing worse than execs of of a corp getting paid off at the expense of employees during a take over, is when a nameless venture cap org does.

      We don't know the whole story, but if venture cap nuked execs (that might possibly have been instrumental in making the company successful) to increase their own take, that is *WORSE*.

      • by twidarkling (1537077) on Monday June 20, 2011 @11:45AM (#36502068)

        Why? At least VCs actually do something with the cash. Invest it in other places to make more money. C*Os tend to simply sit in a company and get rich. Sometimes they move to other companies that are already established and get rich. Very rarely do they take that money and knowledge and make something new to make money with.

        • by DontBlameCanada (1325547) on Monday June 20, 2011 @12:31PM (#36502760)

          C*O's of start ups or young companies typically aren't fat cats who siphon cash while contributing zero. A small corp will quickly die off as all jobs, from ground floor peons to the CEO are important.

          C*Os of established corps can indeed be fat cats. Established revenue streams, customers, large enough assert hoards to give a company viability via inertia for more than 4 quarters. Inattention and self-serving proclamations that don't result in immediate corporate implosion, can thrive in that environment.

          VC's exist to generate return on investment for their major partners. Some act as angels, but most promise x% return on investment to their patrons. If the VC is short on promise #s, they will take the short term personal gain over the long term health of the entity they are selling.

    • by Gilmoure (18428)

      *golf clap*

  • Corporate Sleeze (Score:4, Insightful)

    by DaMattster (977781) on Monday June 20, 2011 @10:50AM (#36501224)
    That is a really slimy thing to do. However, usually the little guy gets hurt in mergers and aquisitions so I, in some ways, am happy to have the upper echelon get a taste of it. I think these executives that got affected might consider the smaller guys in their future roles, perish the thought.
    • I suspect that they will consider them, since the lesson here would appear to be "finish doing unto others a bit faster next time, or others will do unto you."
    • While I agree with you that execs generally should feel burdens of the workers, in this case I think it sends a very bad message to the workers. The message is that the parent company does not care about contribution. Of the execs named, some of them have helped become what it is. The workers have been alerted that the parent company does not care about the transition at all only the sale.
      • by dynamo (6127)

        So you're implying that some of the workers might have thought that MS cares about contribution? Of value, to products they sell? No, I don't think anyone without a financial reason to would believe that, if they've used an MS product other than Excel.

        • Some of the workers might have thought that MS was was acquiring the company for the people, the customers, and the technology. If MS doesn't care either way, then it's more of a signal that MS only wants the technology.
  • by kenh (9056) on Monday June 20, 2011 @10:51AM (#36501230) Homepage Journal

    "You might think that the executive team that engineered a lucrative buyout for their company would be rewarded. But eight execs from Skype instead found themselves fired just before their company was formally taken over by Microsoft. It appears that this move isn't meddling from Redmond; rather, the private equity firm that owns a 70 percent stake in Skype wanted to cut back on the payout to company execs that would normally accompany this kind of transaction."

    I can't see how it was reasonable to expect that either side of this transaction would want to "reward" those that "engineered a lucrative buy-out" - either it costs the investors money (why give up money you don't have to?) or the buyer will be mad at the people that increased the price of your aqusition (why reward someone for driving up your cost?).

    • How about the factor that by removing the execs, the acquisition and transition is now more complicated which may mean that it may be more expensive. From the sounds of it, these execs will leave soon. While they do not have technical knowledge, they may have contacts and business knowledge MS will need. Add to that the sudden removal of execs may mean the people under them may leave too.
    • It only costs short investors money; long-position investors make money because of the increased (over)valuation of the company.
    • by s73v3r (963317)

      This statement is absurd on its face. Why the fuck else should they engineer this, if they weren't getting a reward?

  • Interesting... (Score:4, Interesting)

    by fuzzyfuzzyfungus (1223518) on Monday June 20, 2011 @10:52AM (#36501252) Journal
    Ordinarily, even pathetic, abject failure verging on negligence isn't enough to get the People Who Matter sacked. These private equity guys must have some epic level suits on staff, if they are able to rightsize executives as though they were mere peons...
    • Re: (Score:3, Informative)

      by TheSpoom (715771)

      Please don't use the word "rightsize". It's just insulting all around. They were fired.

    • by Zocalo (252965)
      I wonder if there is any correlation between those execs that were fired and those that didn't think that a buyout by MS was the way to go. Now that there are likely to be large sums of cash heading their way I can just imagine some creative headcount reduction going on to try and increase the slices of the pie for the rest; "You didn't support the MS buyout, so you're not getting a share of the payouts either..."
  • by 140Mandak262Jamuna (970587) on Monday June 20, 2011 @10:54AM (#36501274) Journal
    These guys are big fish, swimming with the sharks. For example Gurle joined in Jan 2010. Just 18 months with the company. All the fired ones seem to be the MBA types who move in just to dress the company up for sale or IPO. Not the founders and early grunts who toil in garages and warehouses during the very early days living on pizza, sleeping in the office, desperately churning out code on a shoe string budget, not knowing if they can make pay roll next month.

    These suits ate little fish in their time. They got eaten by bigger fish. They will again start eating little fish once again. Just stay out of their jaws, if you can.

    • by PPH (736903)

      I'll shed no tears. Primarily because people at these levels typically negotiate personal services contracts rather than employment at will. And any smart attorney will include language to lock in benefits (or a suitable termination fee) in the event any change in ownership is impending.

      The founders and early employees will probably get Microsoft stock. For that, they will shed tears. I'll be ROTFLMA.

  • by Opportunist (166417) on Monday June 20, 2011 @10:55AM (#36501308)

    You know, every time a takeover happens some people get fired.

    I am delighted to see that for a change it happens to you.

    • You know, every time a takeover happens some people get fired.

      I am delighted to see that for a change it happens to you.

      The last executive I knew personally who got fired got a two year paid vacation and the free services of a company to find him his next cushy job. These execs were just rewarded for selling their company. There's no way you can spin this as a bad thing for them.

  • ...cue litigation in ...1...2...3...
  • Reading into it? (Score:3, Insightful)

    by DaScribbler (701492) on Monday June 20, 2011 @11:01AM (#36501402)

    This submission, and the article referenced to, read entirely differently.

    Where exactly does it say they were fired?

    • by Lifyre (960576)

      It doesn't. There is probably more and better sources that mysteriously got left out of the summary per usual practice.

  • by smoothnorman (1670542) on Monday June 20, 2011 @11:02AM (#36501412)
    A wise old CEO wheezed unto me: "A merger is a risk to everyone except one of the two CEOs - to everyone else it is a danger". Mergers reduce competition, so the market loses; mergers cost stockholders, at least in the short-run; mergers are engines of redundancy so it's a threat to all the employees. The only possible virtual gain is an investors' promise of less competition in the marketplace. Almost everyone loses. So the next time you read: "Massive-corp to buy out Macro-corp!" try not to cheer for the two original owners who get their one-time lottery prize, but instead pause in lament for the majority and progress in general.
    • by cowtamer (311087)

      >> but instead pause in lament for the majority and progress in general

      I always do! The other thing I try to do is leave as soon as possible if the company I happen to be working for is the one that has been acquired (former co-workers are inevitably laid off several months later). I hate mergers more as a customer since I've never seen service _NOT_ suffer... (the exception might be the acquisition of KeyHole by Google to form Google Earth)

    • Because of our corrupt campaign finance system, neither Republicans nor Democrats will enforce the anti-trust laws. So we have constant mergers reducing the number of players competing in every market, but no force actively breaking up larger companies into smaller companies to apply pressure in the other direction.

      The net result is less competition, and I shouldn't have to remind you that competition is the engine that drives a capitalist system.

    • No, mergers also generate efficiencies, and efficiencies are good for everyone. Especially true for vertical mergers (i.e. for firms producing complementary products). Look up "double marginalisation".
  • Now we can not say "Nobody got fired for buying Microsoft" let it spread like wildfire... let all top execs that are Microsoft Horny get laid off.

    • Well, still nobody gets fired for buying Microsoft, but you might get fired for Microsoft buying you.

      • by McNihil (612243)

        Well it is more symbiotic than that when it is a business deal. IMHO it is always a mutual investment-buy rather than any selling.

  • I hope they purge their gui designer too, I'm still using skype 3.8 because of the horrible chat interface of skype 4 and 5, for example these days everyone has a widescreen, so why the fuck they waste vertical space by putting a huge contact list on the top instead of leaving it to the right? the chat content doesn't automatically resize with the window, you have to drag it, also there is no big visual difference between your and others text, with skype 3 you get a big blue/gray bar before the text, with s
    • by Ash-Fox (726320)

      I'm still using skype 3.8 because of the horrible chat interface of skype 4 and 5, for example these days everyone has a widescreen, so why the fuck they waste vertical space by putting a huge contact list on the top instead of leaving it to the right? the chat content doesn't automatically resize with the window, you have to drag it, also there is no big visual difference between your and others text, with skype 3 you get a big blue/gray bar before the text, with skype 4-5 it's very subtle since it's only

  • by PrimeNumber (136578) <PrimeNumber@noSPAM.excite.com> on Monday June 20, 2011 @11:20AM (#36501694) Homepage

    What this basically means is the same type of executives that outsource operations and employees, needlessly eliminating thousands of positions at high tech companies for "cost cutting" purposes aka bonuses -- these very people are surprised they are being treated the same way by another greedy group of managers and money-men ?!

  • A story about sociopaths firing other sociopaths.

  • Usually, it's the little guys who get the axe while the executives get a parachute. Clearly there is more to this story than what we have available to us now. Perhaps there simply wasn't enough at the lower levels to cut to make a difference.

    In the past, we have seen certain amounts of honor among the high level executive group offering each other golden parachutes and other deals that the regular people don't get. And what I read did not mention anything about exit compensation packages. They might hav

  • Good for them.....
    they should have done this with all the big bankers also that put us in the economic mess we've been in, so that after being fired would
    touch 0 dollars upon exiting for being so lax with the loan assessment scenarios that put the whole world economy in jeopardy!

  • I live in BC, Canada... and the concept of "at will" employment is a bit alien to me... I am wondering, however, do states which have it even utilize the concept of a finite length probationary period for new employees? I'm asking because my understanding about "at will" employment is that a person can be let go from their job for just about any reason that suits the employer's fancy, at any time, as long as the reason given doesn't come afoul of any human rights. In BC, this type of dismissal can only be
  • Where's the connection between TFA and the summary? TFS

    "You might think that the executive team that engineered a lucrative buyout for their company would be rewarded. But eight execs from Skype instead found themselves fired just before their company was formally taken over by Microsoft. It appears that this move isn't meddling from Redmond; rather, the private equity firm that owns a 70 percent stake in Skype wanted to cut back on the payout to company execs that would normally accompany this kind of transaction."

    Damn, that's sneaky. Except wait - here are the eight execs:

    The departures included David Gurle, vice president and general manager for Skype for Business; Don Albert, vice president and general manager for the Americas and Advertising; Doug Bewsher, chief marketing officer; Christopher Dean, head of consumer market business development; Russ Shaw, vice president and general manager; and Anne Gillespie, head of human resources. Two executives who joined Skype following its acquisition earlier this year of video-sharing utility Qik have also left. They are Qik founder Ramu Sunkara and senior vice president Allyson Campa.

    Sooo... on what basis do we conclude that these eight execs engineered the deal? Let's also not forget that these were released in the months leading up to the buyout - it's not like on the eve of the approval they were all fired. I could also make a point of saying we don't *know* that they were fired - as TFA doesn't specify it - but the timing *does*seems awfully convenient if they all de

  • And executives wonder why there isn't any employee loyalty in a company any more? Perfect example of why the only way to get a raise is to take your skills and get a job with another company.

    What's next for Skype? Easy: get rid of the superfluous programmers—you know, the guys that made Skype work—and hire telemarketers at less than 20% of the engineers' salaries to push the new business. Better: I'm willing to bet that this "private equity firm" owns a marketing business, which will soon get a

  • by vinlud (230623)

    They probably got a good pile of money in their pockets anyway

    Also, from the same site: http://www.itworld.com/unified-communications/166637/5-skype-alternatives-linux-users [itworld.com]

    While many people use Skype for its free voice over IP (VoIP) services, Linux users have a love/hate relationship with it. Yes, Skype will run on some versions of Linux, but it doesn't run on all of them, and the Linux version (2.2-beta) lags far behind the Windows version (Skype 5.3). That's three major generations behind. Need I say mo

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