16 Comments

Summary:

After promising an initial public offering for the past six years, Motricity has officially filed documents to raise up to $250 million thro…

Motricity's CEO Ryan Wuerch

After promising an initial public offering for the past six years, Motricity has officially filed documents to raise up to $250 million through the public markets.

The man behind the deal is Ryan Wuerch, the founder and CEO of the Bellevue, Wash.-based company, who has been in the spotlight for better or for worse. While being very successful at raising hundreds of millions of dollars from investors, like billionaire Carl Icahn, he was highly criticized for his decision to buy InfoSpace (NSDQ: INSP) Mobile for $135 million in 2007. That acquisition brought out his harshest critics, who were enraged after he laid off most of the Motricity’s employees; moved the headquarters from North Carolina to Bellevue; and ditched Motricity’s core technology in favor of InfoSpace’s. Still, today, it was likely the best decision for the the company given its reliance on its previous competitor’s technology, clients and employees.

Now that Motricity has filed for an IPO, there’s more information available on how the 42-year-old Wuerch managed the company from behind the scenes. We scoured the public filings to find his compensation package, which includes generous relocation benefits and incentives to either sell the company or have it go public in the next six months.

Wuerch has plenty of incentive in his employment agreement to either sell the company or have it go public by July 25:

Salary: In 2009, Wuerch earned a salary of $365,000 and all other compensation of $73,000, which consisted of a stipend for cost of living adjustments for moving to the Seattle area. He will continue to get the adjustments until July 25, 2010 or the company’s IPO (whichever comes first). The company said that while no executives received salary increases during 2009 because of the poor economy, Wuerch’s salary will increase to $450,000 as soon as the company goes public.

Motivation to go public: Wuerch entered into a new two-year employment agreement on Jan. 19, 2010. In 2010, he will have the chance to earn an additional 75 percent of his salary if the company hits certain financial thresholds. When the company IPOs, it will increase to 100% of his salary and it will be pro-rated from the date of the IPO.

Motivation to sell: If Motricity is sold prior to either an IPO or July 25, Wuerch will receive a bonus. If the sale price is less than $300 million, he will receive a lump sum of $2 million. If it sells for more than $300 million, Wuerch will receive 1 percent of the value of the sale. (A $400 million-dollar sale will mean $4 million, etc.). In both circumstances, all of the company’s equity must be sold.

Motricity is still paying the price for relocating the company to Bellevue:

Relocation: Motricity purchased both Wuerch’s house and Motricity’s COO Jim Smith’s house based on prices determined by a third-party company. Wuerch’s house was appraised at $2 million and Smith’s was worth $1.2 million. Under the arrangements, Motricity paid the mortgage and all costs associated with the homes, including taxes, insurance, utilities, maintenance, repairs and improvements, until they sold. In November, Smith

  1. Interesting that he could be looking to sell the company privately before the IPO. One potential buyer could be Amdocs(DOX) who I believe is their biggest competitor in the space. I doubt he would sell the company for only $300 Million though, double that is more like it.

    Share
  2. Wuerch is protected behind an iron veil, not surprising; pretty much for any reason he is let go, demoted, etc. he gets a payout.

    Wonder what the reverse split number and opening price will be..

    Share
  3. Re: “Wuerch has plenty of incentive in his employment agreement to either sell the company or have it go public by July 25″

    Are you insinuating that the IPO is driven by Wuerch’s personal financial motivation? That’s not how these things get done

    Share
  4. Motricity’s owners bought Wuerch’s house for $2 million?! I doubt it’s worth $1 million in that neighborhood. And all that pay for a college dropout whose company has only lost money (don’t trot out dropouts like Gates and Jobs as counterexamples, their companies made money)? Of whom does this fellow have pictures?

    Share
  5. speaking of incentives... Monday, January 25, 2010

    What was Wuerch’s incentive to say as reported on 1 March 2007 that Icahn’s investment gave him a “single digit” ownership stake when the S-1 form, with which officers must attest that they are telling the truth, shows Icahn with an ownership stake of over 21%? Excerpts below:

    From 1 March 2007 interview:
    Icahn and Wuerch met through one of Motricity’s investors. The deal gave Icahn a “single digit” ownership in Motricity, according to Wuerch, and Icahn’s son Brett will join the Motricity board.

    From S-1 form:
    Name of Beneficial Owner Shares Beneficially Owned Percent of total
    Carl C. Icahn 99,153,651 21.13 %

    I guess statements we make we don’t have to swear to are sort of like statements we make when we’re selling nutritional supplements, shamwows, or slapchops. Anything goes…

    Share
  6. ^ i believe icahn had two rounds of investments, one at the beginning of that year and another when they bought infospace – the statement having been made shortly after the first round

    Share
  7. you “believe” that because that’s what they wanted you to believe. there was a lot of vagueness around that whole thing. let’s all grow up. do your research if it’s important to you. there was ONE, count’em ONE Icahn $50 million investment. it gave him 20% ownership. which is a total valuation of $250 million. look familiar? that’s exactly what they’re going for in the IPO. Icahn wants his money back and wants this monkey off his back.

    Share
  8. From March 10, 2008

    Icahn Questions Motricity Investment; Has Faith In The Technology

    http://moconews.net/article/419-icahn-questions-motricity-investment-has-faith-in-the-technology/

    Share
  9. sources and uses of funds Monday, February 1, 2010

    From deep inside the S-1 (dollars in thousands):

    “Under the terms of the employment agreement with our Chief Executive Officer, we issued loans of $250 and $32 in 2004 for the costs of relocating to our headquarters in Durham, North Carolina. The loans carry an annual interest rate equal to the prime rate, with the applicable interest rate for the year set on January 1 of each year. Interest is payable annually, and the loans are repayable to the Company upon a liquidation event, including the sale or disposition of substantially all of our assets, the sale of more than 50% of the then outstanding common stock in a single transaction, or an initial public offering of our common stock. The outstanding loan balances, including accrued interest, was $326 and $345 at December 31, 2007 and 2008, respectively, and were included in other assets on the consolidated balance sheets. On December 18, 2009, all amounts outstanding between us and the Chief Executive Officer, including the principal and accrued interest on the loans, were settled by the Chief Executive Officer through a transfer of common stock.

    During 2008, in connection with the relocation of our headquarters to Bellevue, Washington, we paid a relocation services company to purchase, on our behalf, the Chief Executive Officer’s home in North Carolina for $1,983, plus administrative fees. As a result of market conditions, in the fourth quarter of 2008, we recorded a restructuring charge of $342 related to the home and an additional restructuring charge of $203 during 2009. The asset is recorded within assets held for sale on the consolidated balance sheets for $1,700 and $1,497 as of December 31, 2008 and September 30, 2009, respectively.

    During 2009, we purchased the home of our new Chief Operating Officer in order to facilitate his relocation to Bellevue, Washington. We purchased the home for $1,195, and as a result of market conditions we recorded an impairment charge of $317. The asset is recorded within assets held for sale on the consolidated balance sheets for $877 as of September 30, 2009.”

    Total funds written off for CEO housing (some in exchange for worthless stock): $326 + $345 + $342 + $203 + $317 = $1533.

    $1,533,000 in addition to the ridiculous salary added up over 3 years.

    For nothing. The best the initial investors can hope for, given that the “company” raised $400 million and will net $200 million after fees if they can even pull off this IPO pipe dream, is 50 cents on the dollar.

    Original investors: How does eating $1,533,000 for someone else’s luxury housing taste?

    Share

Comments have been disabled for this post