Just when you think things couldn't get any worse for Zillow I read in the SEC Form 10-Q filing that a $7.1m charge will hit the P&L in the 2nd quarter. Interesting this wasn't mentioned on the 'history making'social media' earnings call, and no mention of which rat has jumped the sinking ship. With the reference to the charge hitting sales & marketing I assume they have fired the guy in charge for blowing the 1st quarter earnings with a 138%increase in S&M expenses whilst increasing revenues by only 71%
Note 12. Subsequent Events
In April 2013, pursuant to the terms of a Restricted Stock Unit Award Notice and Restricted Stock Agreement between Zillow and a former employee, 218,071 unvested restricted stock units held by such employee became vested, such that the former employee is entitled to receive one share of Zillow’s Class A common stock for each outstanding restricted stock unit. As a result of the accelerated vesting of the restricted stock units, we expect to record approximately $7.1 million of share-based compensation expense within sales and marketing expense during the three months ended June 30, 2013.
Looks like David Vivero, the RentJuice founder, has 'fallen out' with Zillow and been fired so that Restrictive Stock Units vest immediately based on Zillows Form 10-K for 2012. Just shows the risk associated with high value acquisitions with big Goodwill charge on Balance Sheet. Will this lead to an impairment charge sooner than later? No doubt the RentJuice employees loyalty lies with Vivero rather than with Spencer Rascoff.
Restricted Stock Units
Pursuant to the terms of the Agreement and Plan of Merger described in Note 6 entered into between RentJuice, Zillow and certain other parties, Zillow adopted a retention bonus plan in connection with the closing of the merger pursuant to which restricted stock units for 280,961 shares of our Class A common stock were granted on July 26, 2012 to former employees of RentJuice who accepted employment with Zillow in proportion to each employee’s total equity holdings in RentJuice prior to the closing of the merger. Twenty-five percent of each restricted stock unit award will vest on May 31, 2013, and the remainder will vest in substantially equal installments each three-month period thereafter for three years, subject to the recipient’s continued full-time employment or service to Zillow. With respect to grants to the founders of RentJuice, in the event of termination of service by Zillow of a founder of RentJuice without cause, resignation by such founder of RentJuice for good reason or upon such founder’s death or disability, any unvested units held by such founder will become vested units, and such founder of RentJuice will be entitled to receive one share of Zillow’s Class A common stock for each then outstanding unit. The grant date fair value of the restricted stock units is approximately $11.2 million.
Has anyone seen any details about which executive has walked out the Zillow front door with a check for $7.1m? I was just wondering if I missed any announcement naming the lucky person. I know I have speculated that it might be David Vivero who was founder and CEO of RentJuice that Zillow acquired last year, and named as VP of Zillow Rentals when the deal closed. Like many others I am interested to be better informed of the facts of such a massive financial charge hitting in Q2. It also amazes me how the Analysts following Zillow seem to have their heads in the sand as they blindingly ignore anything factual related to Zillows operational and financial performance. Not sure I have seen any comments by the Analysts following Zillow since the charge was quietly communicated in the 10-K a few hours after the "history making social media earnings call" ended.
That blows the earnings forecast for the year. Zillow will drop like a rock on news like this. How many other Zillow Fatcats are tired of putting up with egotistical CEO Spencer Rascoff's BS and want out? OR, are failing and get fired with massive numbers of Restrictive Stock Units. The potential P&L hit is unimaginable.