$20 Billion — And Another Billion For CEO Dylan Field To Stick Around

The Figma co-founder and some employees will earn billions more in a historic customer loyalty package after the acquisition by the software giant.

Adobe caused a stir on Wall Street and Silicon Valley when it announced Thursday it would buy design software startup Figma for $20 billion. But the deal is far more expensive for Adobe, due to a historic retention package for CEO Dylan Field and employees worth $2.3 billion at the time of the announcement — more than $1 billion of that for Field alone.

The additional compensation will come in the form of six million restricted stock units, or RSUs, that vest over a four-year period, Adobe said in its deal announcement. But half of that is for Field alone, say two sources with knowledge forbes. And Adobe initially offered Field more, the sources add, before the CEO agreed on a roughly equal split with employees.

Adobe has not responded to a request for comment on Field’s retention package. A Figma spokesperson declined to speak on behalf of Field and Figma.

At Adobe’s announced acquisition price of $20 billion in cash and stock, the total retention package would be valued at approximately $2.3 billion. With Adobe’s shares down more than 20% since the news, the deal would be valued at $18 billion today, with $1.7 billion in additional tie-in compensation.

Not all employees benefit from this. As reflected in a regulatory filing regarding the proposed acquisition, Figma informed employees that Figma and Adobe would jointly decide which “subset of Figmates” would receive such grants. “Our team is still growing rapidly and we want to create opportunities for new hires in the pre-graduation period to also be considered for retention grants,” the company wrote.

The proposed acquisition, which the companies say is expected to close in 2023, has sparked concern among some Adobe investors, who are worried about the cost — 50 times Figma’s expected earnings for the year — and some Figma fans in the Design community turned to memes prompted backlash, re-sharing a 2021 Field tweet that “our goal is to be Figma, not Adobe.” The deal will make Field and co-founder Evan Wallace billionaires make. (Wallace left the company in 2021).

Adobe’s shares have fallen more than 20% since the announcement, evaporating $29 billion in market cap and causing several prominent analysts to downgrade their ratings.

Adobe’s reasons for the deal, even at such a hefty price tag, are simple, analysts say: The move pulls Adobe into the cloud, an area that has historically been difficult to gain a foothold in, while also reaching a new cohort of design software customers. Acquiring Figma not only takes a potential existential threat off the table, but also creates an opportunity to grow this business by integrating with Adobe’s broader user base. To do this, Adobe is more likely to rely on the LinkedIn model, which Microsoft acquired for $26 billion in 2016 and which Microsoft has run largely independently over the years under former CEO Jeff Weiner (a Field mentor, incidentally).

A big part of that is keeping Field and his top lieutenants, and Adobe pays a premium for that. Field, 30, has run Figma since 2012 and enjoys credibility with customers and the wider designer community, they say. (Perhaps recent tweets aside.) “They clearly want him to stay,” says Alex Zukin, an analyst at Wolfe Research, who called the deal’s timing and price more surprising than its substance. “If not for him [as a future CEO option for Adobe]for the value of the fortune that is brought.”

Still, it’s a historically large retention package in recent technology history, especially in enterprise software. Salesforce’s acquisition of Slack in 2021 and Microsoft’s acquisition of LinkedIn in 2016, both major $27 billion and $26 billion acquisitions, involved public company purchases of public companies and therefore had very little additional compensation: none for Slack co-founder and CEO Stewart Butterfield, and only $7 million for LinkedIn CEO Jeff Weiner (a mentor to Field, by the way).

IBM’s $15 billion purchase of Mobileye in 2017, meanwhile, only revised CEO Amnon Shashua’s vesting schedule for receiving more shares, while Okta’s $6.5 billion acquisition of Auth0 last year added $25 million. dollars for employees and an undisclosed separate amount for its CEO.

To find more substantial storage packages in technology, one must turn to consumer goods. Walmart’s fall 2016 acquisition of e-commerce site Jet.com for $3 billion in cash and $300 million in stock included a package of 3.5 million restricted shares for CEO Marc Lore, about $250 million at the time worth dollars, and double what it was then they became fully vested five years later. Walmart eventually shut down Jet.com in 2020, but Lore held out longer, leaving the company more than four years after the sale in early 2021.

More recently, Intuit’s $7 billion acquisition of personal finance site Credit Karma in 2020 also included $300 million in RSUs for “certain” employees: executives received about $125 million per submission, while founder and CEO Kenneth Lin received nearly $75 million in restricted stock, plus an additional $40 million in cash from the Board of Directors of Credit Karma.

The gold standard for tech start-up packages remains what Facebook offered founders Jan Koum and Brian Acton when it acquired their startup WhatsApp for $19 billion in 2014, on top of the billions they should already be receiving. The messaging app’s employees received 45.9 million RSUs, worth $3.6 billion at the time and more than $7 billion four years later. CEO Koum received nearly 25 million RSUs in a retention package valued at the time at $1.9 billion; Though he left the company six months before the four-year lockup expired, Facebook’s soaring stock price meant his vested stock was still worth about $3 billion. (Acton, meanwhile, was talking forbes in 2018 that his protest exit left $850 million on the table.)

Several executives who didn’t get much from a retention package didn’t stick with it. Salesforce’s $6.5 billion acquisition of MuleSoft in 2018 and Cisco’s $3.7 billion acquisition of AppDynamics in 2017 did not disclose such packages on filing. The CEOs of both companies left within two years – with AppDynamics CEO David Wadhwani ultimately helping to drive the acquisition of Figma, now as Adobe’s executive.

Salesforce’s $15.7 billion acquisition of Tableau in 2019, another public-public deal, included nearly $20 million in new RSUs for then-CEO Adam Selipsky and a plan to give him more to grant refreshed equity grants. But that’s not all: Less than two years later, Selipsky returned to former employer Amazon Web Services to take on its CEO job.

While analysts might question the price Adobe paid for Figma in the short term as a “defensive move” — especially coupled with a weaker earnings forecast that’s caused recent pressure on the stock — the retention package is both in terms of its duration useful as well as its scope. Cowen analyst Derrick Wood sees similarities to the generous compensation package offered by Snowflake CEO Frank Slootman ahead of the cloud data company’s 2020 IPO. For the gamble to pay off, Adobe needs Field and its “Figmates,” notes Mizuho Americas analyst Gregg Moskovitz — and Figma knows it, too.

“It reflects the fact that Figma was a powerful company with a lot of options, so it certainly didn’t have to sell,” says Moskovitz.

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