Memo from AOL CEO Tim Armstrong reveals new details about the 2011 $315 million acquisition
Legal documents recently filed by two men embroiled in a lawsuit against the Huffington Post show that Arianna Huffington's take of the site's February 2011 purchase by AOL was “approximately $21 million.”
The compensation was revealed in a memo from AOL CEO Tim Armstrong about the $315 million purchase included as part of the suit's evidence. It's the first time Huffington's profit has been made public.
“Arianna Huffington, for example, she will receive total deal consideration of approximately $21 million, of which $3.4 million will be deferred as unvested options that will vest over approximately 20 months,” the memo said.
The memo also said that AOL was expecting the site to generate $60 million in revenue in 2011 and $165 million in 2013. That didn't pan out; HuffPost reportedly earned just $40 million in 2011, amid significant spending increases as Huffington bulked up staff with premium high-profile hires.
The memo noted that half of HuffPost's content was provided by its unpaid blogger network, which could be a liability for the company:
“Using unpaid ‘volunteers’ in a for-profit business such as HuffPost may result in potential claims for unpaid wages. HuffPost's use of unpaid bloggers has been criticized and debated in articles and on various websites. The law regarding whether for-profit companies may use unpaid volunteers, such as these bloggers, and what constitutes a ‘volunteer’ is unsettled.”
That's exactly what happened: about 9,000 of those bloggers sued the Huffington Post for over $100 million; the suit was dismissed in 2012.
Pamela Chelin contributed to this report.