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Skype CEO, not investors, made the key cuts

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Skype CEO Tony Bates — and not the company’s private equity investors — were behind Skype’s decision to part ways with many of its senior managers, a company spokesperson told GigaOM. Skype Journal reported earlier that a whole gaggle of senior-level executives had been cut from Skype.

Those who were let go included  David GurléChristopher DeanRuss ShawDon AlbertDoug Bewsher and Anne Gillespie. Later, Bloomberg News reported that Ramu Sunkara and Allyson Campa, who joined Skype via its Qik acquisition, were cut too.

The company, according to Brian O’Shaughnessy, Skype’s PR chief, is rationalizing its operations and is focusing its resources on engineering and product. Reports in other media outlets have indicated that it is the private equity investors who might be behind the cuts. “It is Tony’s decision,” said O’Shaughnessy.

Bloomberg report indicated that the firings would reduce the value of the payouts to those executives, though investors in Skype dismiss that talk. Skype investors say that most of these executives are getting about 75 percent of the payouts due to them.

That said, Skype as a company isn’t known to be generous with its employees when it comes to doling out options. That was true in both the pre- and post-eBay days. Nevertheless, I don’t think we have heard the last of this development, so stay tuned.

Our buddy Andy Abramson notes that Christopher Dean was unfairly treated.

The one guy of the bunch who I can single out who deserves some solid recognition is Christopher Dean. He headed up corporate strategy and was the guy who likely did the most to help Skype move along for the future. The last two deals he did that the Silicon Valley echo chamber should take note of was Skype’s acquisition of QIK and the partnership with Comcast, both of which he put together.

Dean’s a solid corporate and business development guy, a star in some rights, and he clearly did his job after being brought in under Jonathan Silverman, who is now at AMERICAN EXPRESS. The move on QIK saved Skype millions in potential royalties for video compression and streaming delivery technology that they would have to continue to pay Google and others. The Comcast move makes Dean the first exec to successfully sell a video calling solution to Comcast in the last two decades. It’s a play that’s been tried before, and everyone else came up short. Dean was also reportedly one of the masterminds behind the “let’s IPO to get acquired strategy” long before even the Silver Lake folks came along.

9 Responses to “Skype CEO, not investors, made the key cuts”

  1. Skype Insider

    To those who say that Skype employees should have sought legal advice – a few comments in response

    – Skype employees have a stock option agreement and a stock option plan. The stock option plan, in turn, contains a “blink and you missed it” reference to a third document, a Partnership Agreement in the Cayman Islands, the jurisdiction where the stock options are actually held. That means to obtain competent legal advice, a typical employee would need to retain lawyers in both their home state and in the Caymans. Then they would need to retain a lawyer in New York because Skype chose New York state law to apply to many provisions (nb: strangely, Skype has no employees in New York and claims, for regulatory purposes, not to even “do business” there). Q – Do we really expect this kind of massive “lawyering up” from new employees?

    – These were not negotiated agreements. Employees were induced to join Skype with promises of stock options, and then, after leaving their other jobs behind, were instructed to sign these convoluted agreements – Take it or leave it.

    – It is very revealing that Skype, unlike every other tech company, chose not to furnish its rank and file employees with a “Q&A” overview or summary of key provisions of its stock option plan. They knew they were engaged in a deception and decided to keep it dark.

    – No amount of lawyering should be able to take away the common-sense and “legal” definition of vested. From Black’s law dictionary “vested ” means “having become a completed, consummated right for present or future enjoyment, not contingent, unconditional, absolute.”

    – Finally Skype/Silver Lake have not successfully cheated anyone out of their vested options yet. This won’t be over for a long time….

  2. McBeese

    “Skype investors say that most of these executives are getting about 75 percent of the payouts *due to them*.”

    Or worded differently, these executives are getting screwed out of about 25% of the payouts *due to them*.

    • FreeRange

      Exactly – total scum bags. It is hard to find strong ethics and morality in business anymore. Just look at the way banks treat their customers… Hope these guys sue the shite out of these greedy a-holes.

  3. Marl Balou

    I second what @Darwin has stated. I find it hard to believe that this was part of the normal business operations. Firing 8 senior people in one shot!

  4. From what I understand, Skype’s investors did not respect most of Skype’s management. They wouldn’t have had to pull the pin on these guys themselves if they had expressed this opinion to the CEO they installed, and taking the blame is the least Bates can do for his payout.

    • I am going to talk to others as well and trying to get to the bottom of it, including looking for photos etc. Clearly there is two sides to this story. Each one is half the story as they say.

      • I have yet to see your “other side” of the story. But from my experience, a move like this by the CEO does not occur without the “behind the scenes” negotiations and approval of the board and investors. It is all smoke and mirrors to try and shift some of the bad press from Microsoft. No doubt Bates was promised something, perhaps keeping his job, in return for taking the heat.

        Whatever the case, this is a pretty nasty example of corporate greed screwing over its employees, other reports I have read put the amount the fired employees lost at a much greater amount than 25%. I have never had a great opinion of Microsoft, especially since Ballmer took charge, but this is particularly unpleasant, and I’m shocked that GigaOm would just take such cover-up PR at face value.