One Possible Reason Why Publicis Won't Honor Razorfish Stock Options

By
Jim Edwards
| Oct 7, 2009

Razorfish employees transferring from Microsoft to Publicis in the latter’s $530 million acquisition of the digital shop will lose 75 percent of their unvested stock options, according to Ad Age. Obviously, staff there are angry:

“It’s a slap in the face,” said one staffer. “There are a lot of people here talking to lawyers. Some of them blame Publicis.”

The Age story suggests it’s something to do with the difference in
“culture” between tech startups (who often pay in stock) and old school
ad agencies, (who don’t). Perhaps. Or possibly it’s because Razorfish
isn’t profitable, and hasn’t been for a while. When CEO Maurice Levy announced the deal, he said Razorfish made as much money as Digitas. That turned out not to be true, when Microsoft revealed that in fact the shop was a money-loser.

If Publicis were to honor those options in full, it would have to
incur the expense, further reducing Razorfish’s profitability, and
Publicis’, and possibly adding some extra liabilities to the balance
sheet. Given that revenues at Publicis are currently sinking,
the prospect of adding a bundle of extra expenses to the operation due
to a non-profitable acquisition can’t have looked very appealing.

http://industry.bnet.com/advertising/10004269/one-possible-reason-why-publicis-wont-honor-razorfish-stock-options/