Tech buyer uses holdbacks, stock awards to hold onto startup execs after merger

December 2, 2016

stock-shares-no-credit-istock-photoMarketing technology company LiveRamp will shell out millions of dollars in stock awards to retain top executives at data marketing startups Arbor Technologies Inc. and Circulate.com Inc., which LiveRamp plans to acquire for a combined $140 million in cash.

San Francisco-based LiveRamp will award about $21 million in restricted stock units or “inducement awards” to key employees at Arbor and Circulate who stay with the companies for a certain period after the deal closes, according to a Nov. 23 Form 8-K filed with the Securities and Exchange Commission.

LiveRamp — a subsidiary of data marketing company Acxiom Corp. — will also issue $50 million in Acxiom stock awards to replace unvested Arbor shares held by the company’s executives, according to the securities filing.

Some of those awards are subject to so-called holdback arrangements that require the executives to stay for at least 30 months after the acquisition.

LiveRamp says the deals will double its publisher partnerships to more than 450, according to a Nov. 17 statement announcing the acquisitions.

Arbor awards

As part of the Arbor acquisition, Acxiom cancelled certain Arbor stock options that had vested and converted them into a right to receive cash, according to the securities filing.

In addition to the holdback arrangements for executives, Acxiom also said it would grant new restricted stock awards to select Arbor employees to induce them to stay with the company.

Those awards will vest over three years, and about one-third of the stock awards will vest on the first anniversary of the merger’s closing date. Another 8.25 percent will vest each three months thereafter, provided the employee continues to work through each vesting date, the filing said.

According to Acxiom, the “inducement awards” are worth about $11 million.

Circulate awards, cash bonuses

The Circulate merger was approved Nov. 17 by a majority of Circulate’s shareholders, according to the securities filing. But the merger agreement requires Circulate to show that shareholders owning at least 90 percent of the company’s outstanding stock and each individual shareholder who holds at least 1.5 percent of Circulate’s outstanding shares have consented to the merger or waived their appraisal rights in writing, the filing said.

As of Nov. 23, that condition had not been met, the filing said.

After the merger closes, Acxiom will grant new restricted stock awards to select Circulate employees to induce them to stay with the company, according to the filing. The awards will vest over two years, with half vesting on the first anniversary of the deal’s closing date, the filing said. The remainder will vest at a rate of 12.5 percent every three months.

These inducement awards will be worth roughly $10 million, according to the filing.

Acxiom will also pay $2.25 million in cash bonuses to certain company employees to satisfy a compensation arrangement that Circulate created before the deal.

Acxiom Corp. Form 8-K, 2016 WL 06878829 (Nov. 23, 2016).