Uncertainty abounds within Yahoo ahead of the close of its $4.8 billion sale to Verizon.
To help assuage its employees’ concerns, the company on Monday provided answers to frequently asked questions about the pending deal. Some subjects that are top of mind: Will there be layoffs? How will stock options be treated? Who will lead the new operation? And what will happen to Tumblr?
In short, Yahoo has no plans for headcount cuts before the acquisition is set to close in the first quarter of next year. At that time, all stock options will fully vest, leaving employees 90 days to exercise them. Verizon (VZ) will take over any restricted stock units, settling them in cash when they vest according to the same schedules laid out at Yahoo.
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Yahoo CEO Marissa Mayer will remain at least through the deal close, at which time Verizon will decide on a potentially new leadership structure as the business merges operations with AOL (AOL). All Yahoo properties—aside from a few exclusions, such as its Alibaba (BABA) shares, Yahoo Japan (YAHOY) stake, and some intellectual property—will transfer to the telecom giant. (Tumblr included.)
Although Yahoo said that it is “not planning any layoffs” ahead of the close, the company added that it will continue to “focus on achieving our corporate goals.” In other words, don’t count further convulsions out. Yahoo also mentioned that workplace benefits and perks will be “no less favorable, in the aggregate,” than those enjoyed by employees at Verizon-owned AOL after the deal.
For more on the Yahoo-Verizon deal, watch:
Yahoo (YHOO) filed the FAQs with the Securities and Exchange Commission. You can read the text there, or reproduced below.
EMPLOYEE INTERNAL FAQ
Q. Does the announcement have any immediate impact on my job?
A. No. The transaction is not expected to close until Q1 2017.
Q. Does the announcement mean any immediate changes to my current employment benefits?
A. No. At this time, your employment benefits are unchanged.
Q. When the transaction closes, will all Yahoo part-time and full-time employees as of the transaction close date be employed by a Yahoo subsidiary acquired by Verizon (collectively, “Verizon”)?
A. Yes. All part-time and full-time employees as of the transaction close date will be employed by Verizon following the closing.
Q. Will there be layoffs between now and the transaction closing?
A. At this time, Yahoo is not planning any layoffs in anticipation of the transaction closing. Prior to the transaction closing, we will continue to operate our business independently, focus on achieving our corporate goals and manage employee performance in the ordinary course of business.
Q. Will there be layoffs after the transaction closes?
A. That is a decision for Verizon. However, you will remain eligible for the severance benefits that apply to you described in Yahoo’s Change in Control Employee Severance Plan for a period of 12 months (24 months in certain international jurisdictions) after the transaction closes. More information about the company’s Change in Control Employee Severance Plan is available on Backyard at yo/coc.
Q. Does the announcement mean that a Change In Control has occurred under the Change in Control Employee Severance Plan?
A. No. For purposes of the plan, a Change in Control has not occurred as a result of the announcement, but a Change in Control will occur when the transaction closes. More detailed information about the company’s Change in Control Employee Severance Plan is available on Backyard at yo/coc.
Q. Will I still be covered by Yahoo’s Change in Control Employee Severance Plan?
A. Yes, you will continue to be eligible for the severance benefits that apply to you described in Yahoo’s Change in Control Employee Severance Plan for a period of 12 months (24 months in certain international jurisdictions) after the transaction closes. More information about the company’s Change in Control Employee Severance Plan is available on Backyard at yo/coc.
Q. Does Yahoo plan to offer severance benefits to employees who voluntarily resign?
A. No.
Q. What will happen to my base compensation and employment benefits after the transaction closes?
A. The purchase agreement provides that for the first 12 months after the transaction closes, Verizon will provide you with the following:
- A base salary or base wage rate (as applicable) and annual cash bonus opportunities that are no less favorable to you than what is in effect immediately prior to the transaction closing;
- Equity incentive compensation opportunities that are no less favorable than those provided to a similarly situated employee of AOL, Inc.; and
- 401(k) benefits (where applicable), medical benefits and other welfare benefits that are no less favorable, in the aggregate, than those provided to a similarly situated employee of AOL, Inc.
AOL offers health and wellness benefits and a 401(k) Savings Plan with a match. The following is general list of the employee benefits programs that are offered to AOL US employees in 2016. You will receive details about the AOL programs as we get closer to the closing of the transaction.
- Medical/Prescription Insurance
- Health Care Flexible Spending Account
- Dependent Day Care Flexible Spending Account
- Dental Insurance
- Vision Insurance
- 401(k) Savings Plan with Matching Contributions
- Life Insurance
- Disability Insurance
- Paid Holidays
- Vacation
- Sick Time
- Maternity Leave
- Parental & Bonding Leave
- Adoption Assistance
- Tuition Assistance
- Employee Assistance Plan
- Commuter Assistance
- Verizon Employee Discount Program
Please note that final details of your post-close benefits have yet to be determined and may depend on many factors, including the transaction close date and your work location. In locations where it is legally required, appropriate information and/or consultation will occur before any decisions are made with respect to employment terms.
Q. Will my Yahoo tenure carry over to Verizon for purposes of calculating years of continuing service?
A. Yes.
Q. I am on a sales commission plan — will this same plan continue to apply to me after the transaction closes?
A. That has not yet been determined. Verizon and Yahoo will discuss potential integration plans (including sales plan structures) between now and closing. In locations where it is legally required, appropriate information and/or consultation will occur before any decisions are made with respect to employment terms.
Q. Will Yahoo’s 2017 benefits open enrollment process occur in Q4 2016?
A. Yes.
Q. If the transaction closes after 2017 has already started, does that mean my medical benefits may change mid-year?
A. The purchase agreement provides that for the first 12 months after the transaction closes, Verizon will provide each employee with 401(k) benefits (where applicable), medical benefits and other welfare benefits that are no less favorable, in the aggregate, than those provided to a similarly situated employee of AOL, Inc. At this time, we are announcing no changes to post-close medical or other benefits. In locations where it is legally required, appropriate information and/or consultation will occur before any decisions are made with respect to employment terms.
Q. What about Yahoo’s other benefits and workplace perks? Will those continue after the transaction closes?
A. At this time, your employment benefits and workplace perks are unchanged. The purchase agreement provides that for the first 12 months after the transaction closes, Verizon will provide each employee with 401(k) benefits (where applicable), medical benefits and other welfare benefits that are no less favorable, in the aggregate, than those provided to a similarly situated employee of AOL, Inc. At this time, we are announcing no changes to post-close employment benefits and/or workplace perks. In locations where it is legally required, appropriate information and/or consultation will occur before any decisions are made with respect to employment terms.
Q. If I begin a leave of absence (including New Child Leave or 5-Year Leave) before the transaction closes but it is scheduled to end after the transaction closes, what happens?
A. On the transaction close date, you will continue to be employed by the same entity that employed you immediately prior to the transaction close date (although that entity will be owned by Verizon on and after the close date), subject to the previously approved terms of your existing leave of absence.
Q. How will this announcement affect my eligibility for a 2016 YIPEE bonus?
Q. How will the transaction impact my Yahoo Shares?
A. If you own Yahoo shares as of the closing, you will continue to own shares of Yahoo (which will have changed its name to a yet-undetermined name, but which we refer to in these FAQs as “RemainCo”) post-closing. There will be no change.
Q. What will happen to my Yahoo stock options when the transaction closes?
Q. I still hold Yahoo stock from the Employee Stock Purchase Plan or “ESPP”. Will those Yahoo shares convert into Verizon shares?
A. No. If you are holding shares of Yahoo stock, you will continue to own shares of RemainCo post closing. There will be no change.
Q. What will happen to my Yahoo RSUs when the transaction closes?
A. In general, a Verizon cash-settled RSU award will be substituted for each Yahoo RSU award that is unvested and outstanding immediately prior to the closing of the transaction, provided that, the number of RSUs subject to the Verizon RSU award will change to reflect the relative prices of Yahoo and Verizon stock. Your vesting schedule and other terms and conditions will remain the same.
The value of your unvested Yahoo RSUs just before the closing will be the same as the value of your unvested Verizon RSUs just after the closing. But the number of RSUs will change to reflect the relative prices of Yahoo and Verizon, as shown in the example below.
| Yahoo Stock Before Closing | Verizon Stock After Closing | Notes: | ||||||||
| Stock Price | $ | 40 | $ | 50 | Adjustment Ratio: 40/50 = 0.8 | |||||
| Number of RSUs | 1,000 | 800 | 1,000 × 0.8 = 800 | |||||||
| Total RSU Value | $ | 40,000 | $ | 40,000 | $40,000 = 1,000 × $40 (before)
$40,000 = 800 × $50 (after) | |||||
For purposes of calculating the adjustment ratio, (1) Yahoo’s stock price before the closing will be the volume weighted average price of a share of Yahoo common stock trading on Nasdaq over the three trading days immediately preceding the day before the closing date; and (2) Verizon’s stock price after the closing will be the volume weighted average price of a share of Verizon common stock trading on the New York Stock Exchange over the first three trading days after the closing date.
Q. Will I be eligible for consideration of future equity incentive compensation grants from Verizon?
Q: Will my manager change before or after the transaction closes?
Q. Does this announcement mean any immediate changes to Yahoo’s performance review / QPR processes?
A. We are announcing no changes.
Q. I am a visa holder. What happens to my visa status? Will Verizon continue to support my visa?
Q. I have an application for a Green Card (permanent U.S. resident) with Yahoo as the employee sponsor. With the news, will Verizon honor that sponsorship or will I have to start over?
A. There are currently no changes to your application process — Yahoo will continue to sponsor employees with pending Green Card (permanent U.S. resident) applications prior to the transaction close date. During this time, Yahoo will also work with Verizon to minimize any disruption to employees in the Green Card (permanent U.S. resident) application process.
Q. Does this announcement affect my ability to explore job opportunities on other teams?
Q. Is Yahoo still hiring prior to the transaction close?
Q. Are Yahoo employees eligible for promotions prior to the transaction close?
Q. Will Yahoo be moving or closing offices?
A. At this time, we’re announcing no changes. Prior to the transaction closing, we will continue to operate our business independently from Verizon and focus on achieving our corporate goals. Verizon and Yahoo will discuss post-close integration plans between signing and closing.
Q. What if I have additional questions?
YAHOO-VERIZON AGREEMENT INTERNAL FAQ – TRANSACTION OVERVIEW
Q. What are the terms of the agreement?
A. As noted in the press release announcing the transaction, Verizon has agreed to purchase the operating business assets of Yahoo for a purchase price of approximately $4.83 billion in cash, subject to certain adjustments. In addition, Verizon will generally substitute cash-settled Verizon RSUs for Yahoo RSUs that are outstanding at the closing.
A. The sale to Verizon will include all assets and liabilities of Yahoo’s operating business (including our products, brands, and worldwide offices and business operations) other than assets and liabilities identified as Excluded Assets or Retained Liabilities. The Excluded Assets and Retained Liabilities include:
- All shares in Alibaba Group Holdings;
- All shares in Yahoo Japan (but not commercial arrangements with Yahoo Japan, which will be included in the sale to Verizon);
- Yahoo’s non-core IP, which we refer to as the Excalibur IP portfolio;
- Certain minority investment interests;
- Cash at closing; and
- Yahoo’s outstanding convertible notes and certain other retained liabilities.
A. Prior to the closing of the transaction with Verizon, Yahoo will transfer all of its assets and liabilities (other than the Excluded Assets and Retained Liabilities described above) to a newly formed subsidiary named Yahoo Holdings, Inc., which we refer to as “SaleCo.” At the closing, Yahoo will sell SaleCo to Verizon.
- The agreement announced was the product of a rigorous, multi-stage process run by an independent committee of our Board with independent legal and financial advisors to ensure strong competition for Yahoo’s assets by multiple bidders to maximize stockholder value.
- The independent committee, after careful determination and with advice from its independent legal and financial advisors, recommended the Verizon transaction to our full Board.
- Our Board and its independent committee also received an opinion from each of the committee’s financial advisors—Goldman Sachs, J.P. Morgan and PJT Partners—that the consideration to be paid by Verizon in the transaction is fair to the company from a financial point of view.
- Following the recommendation by its independent committee, the Board reviewed the proposed sale and its terms with its advisors and determined that the sale is in the best interest of the company and its stockholders.
Q. What conditions are there to closing the transaction?
- Approval by a vote of Yahoo’s stockholders;
- Antitrust approvals in the US and certain foreign jurisdictions;
- No injunction or order prohibiting the consummation of the transaction;
- Completion of the reorganization (i.e., transfer of Yahoo’s operating business to SaleCo);
- Excalibur IP license (described below) remains in effect; and
- Other customary closing conditions.
Q. When will the transaction close? What is the process moving forward?
- We expect that the transaction will close in Q1 of 2017.
- Between now and closing, we will be working on:
- obtaining antitrust and other regulatory approvals in applicable jurisdictions;
- preparing and filing a proxy statement with the SEC;
- mailing the proxy statement to stockholders and scheduling a special stockholders meeting to vote on the transaction;
- transferring Yahoo’s operating business to SaleCo; and
- integration planning.
Q. Are any elements of our operating business being cut as a result of this transaction? What happens to existing products such as Gemini, BrightRoll, Tumblr, Flickr, Polyvore, Aabaco Small Business and others?
Q. What will happen to the “Yahoo!” name and brand?
A. Verizon will acquire the “Yahoo!” name and brand in the transaction.
Q. Will there be any changes to Yahoo’s leadership team?
Q. What happens to Yahoo’s IP?
- The IP of Yahoo most relevant to Yahoo’s operating business will be included in the sale transaction.
- The non-core IP, which we call the Excalibur IP portfolio, is a valuable asset and will be retained by RemainCo.
- Upon closing of the transaction, Verizon will receive a license to the Excalibur IP for itself and its current and certain future businesses.
Q. Is the transaction subject to stockholder approval?
Q. Who will run RemainCo? Will any current Yahoo employees stay with RemainCo following the closing of the sale of the core business to Verizon?
A. The Yahoo Board will determine the appropriate board and management structure for RemainCo with a view toward maximizing stockholder value and subject to applicable legal requirements. While it is possible that some current Yahoo employees could stay with RemainCo following the closing of the sale, this depends on the business needs of RemainCo and we anticipate that it would be a small number, if any.
Q. Will Yahoo operate independently before and after the closing of the sale to Verizon?
A. Work has been underway for some time to separate our Yahoo Japan and Alibaba Group Holdings stakes from Yahoo’s operating business assets. Our investments in Yahoo Japan and Alibaba Group Holdings will remain with RemainCo, which will become a registered, publicly traded investment company. Our commercial agreements with Yahoo Japan, such as those regarding brand and technology licensing, will be included as part of the sale transaction.
Q. What will happen with respect to Yahoo7?
A. Yahoo7, our joint venture with Seven West Media Limited in Australia and New Zealand, will be included in the sale to Verizon.
A. Until the transaction closes, which we expect to occur in Q1 2017, Yahoo will continue to operate independently. During this period, we will continue to focus on achieving our corporate goals and your contributions remain critical. Pre-closing, Verizon and Yahoo will discuss potential post-closing integration plans.
A. Yes. As noted above, until the transaction closes, Yahoo will continue to operate our businesses independently and may not coordinate competitive conduct or share competitively sensitive information with Verizon. In addition, the agreement signed with Verizon contains restrictions regarding Yahoo’s ability to make certain changes to its business, operations, corporate structure, employee and customer relationships and other matters.
A. While communications with users, advertisers and partners is important, it must be done in manner that complies with antitrust laws, securities laws and contractual requirements relating to the transaction. Approved communications have been sent to our users, advertisers and partners. If you have any questions regarding communications with users, advertisers or partners, please ask your manager or L2.
