AABA Altaba Inc

By Joann S. Lublin 

For LinkedIn Corp.'s Jeff Weiner, it pays to get acquired.

Microsoft Corp. is making extra efforts to keep him employed after agreeing to buy the professional social network where Mr. Weiner has been chief executive since 2008. He will collect a pay package worth about $18 million next year -- and make at least $43 million over four years if he meets performance goals, regulatory filings show. In 2015, Mr. Weiner received total compensation of about $19.9 million, according to a LinkedIn proxy statement.

Under a $26.2 billion deal announced in June, Microsoft also promised Mr. Weiner free rein to run LinkedIn as an independent unit. LinkedIn is the biggest tech company to be offered post-takeover autonomy in recent memory, industry watchers say.

More U.S. businesses are bolstering efforts to retain top executives of acquired concerns because unwanted exits can doom a takeover. Some offer these CEOs well-paid, important positions in the combined enterprise. Certain companies decide who survives the acquisition partly based on independent assessments of executives at the buyer and the bought. Wal-Mart Stores Inc. was eager to keep Marc Lore, founder of Jet.com Inc., after striking a $3.3 billion deal for the web retailer this summer.

When the acquisition closed Sept. 19, Mr. Lore became CEO of U.S. e-commerce for the retail giant, overseeing Walmart.com and Jet.com, an unprofitable startup launched last year.

Similarly, Darius Adamczyk will take the helm of Honeywell International Inc. next March -- nine years after he joined the industrial conglomerate through its purchase of Metrologic Instruments Inc., which he led. "I didn't think I would stay more than a year," Mr. Adamczyk recalled.

Yahoo Inc. CEO Marissa Mayer has bought more than 50 startups since 2012. About a fifth of her top deputies are former heads of acquired startups. Among them is Adam Cahan, who developed a social app IntoNow, says he remained partly because Yahoo pledged to keep his old team intact for at least a year. Verizon Communications Inc. recently committed to purchasing Yahoo's web assets.

Acquirers "are now more aware of the relationship between effective integration of top management teams and merger success," said Jeffrey A. Krug, business school dean at Bloomsburg University of Pennsylvania. Yet the task remains so tough that "many mergers will continue to fail, " he said. Dr. Krug has studied executive turnover rates involving thousands of U.S. takeovers since the 1970s.

On average, he said, companies lose a third of their executives within the first two years of being purchased.

A different scenario unfolded at National Starch, which rival Corn Products International Inc. bought in 2010. All 12 top executives stayed until early 2013 at the producer of food ingredients, now called Ingredion Inc. Six ex-National Starch executives still work there. The day after then-Corn Products CEO Ilene Gordon unveiled the proposed deal, she and her suburban Chicago leadership team flew to New Jersey and dined with National Starch counterparts at a restaurant near the company's headquarters in Bridgewater, N.J. "We want you to stay because of your knowledge and your technology know-how," Ms. Gordon recalled saying during the meal. Ms. Gordon also vowed to build an entirely new company, with a new name and the best of both cultures. Heeding anxious questions from some National Starch executives, she agreed not to relocate its 200 scientists to Chicago and instead deciding to expand their New Jersey technology center.

"She wanted the best talent from both organizations," said Jim P. Zallie, then CEO of National Starch. Ms. Gordon put him in charge of the global specialties business, a new position at the combined company. Compared with a decade ago, it is more common for leaders at acquiring companies to get to know a target's management on their turf, says Laura Miles, who runs the global M&A practice for Bain & Co., a consultancy. The outreach shows "you want to retain the best talent," she said.

Assessments of executives on each side of a deal also have gained in popularity, according to providers such as executive recruiters Egon Zehnder and consultants AlixPartners. Between 15% and 20% of acquirers "take a very objective look at their culture and their talent on both sides," compared with a mere 1% in 2006, estimates Ted. C. Bililies, a managing partner at AlixPartners.

Two-way evaluations don't always result in equal distributions of plum posts. Global Payments Inc. agreed to buy Heartland Payment Systems Inc. late last year.

Global Payments soon asked consulting firm PwC to evaluate both management teams, said Bob Carr, then Heartland's chief executive. He already had decided to leave once the transaction closed.

Mr. Carr says the buyer chose only two of his eight direct reports, one of whom spurned its offer. Global Payments and PwC declined to comment.

Rejected Heartland executives walked away wealthy but unhappy, Mr. Carr said. "They don't have a job to go to every day that they loved."

Write to Joann S. Lublin at joann.lublin@wsj.com

(END) Dow Jones Newswires

September 27, 2016 13:15 ET (17:15 GMT)

Altaba (NASDAQ:AABA)
Historical Stock Chart
From Mar 2024 to Apr 2024

Altaba (NASDAQ:AABA)
Historical Stock Chart
From Apr 2023 to Apr 2024