If it wasn’t already clear that Walmart’s $3.3 billion acquisition of Jet.com is as much about acquiring its CEO, Marc Lore, as everything else, it is now.
Walmart is paying $3 billion to lock in Jet.com’s CEO for an unusually long five years
Another sign of how important Marc Lore is to Walmart.
Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.
Lore’s agreement with Walmart requires him to stay with the world’s biggest retailer for at least five years, according to a person familiar with the deal. More typically, executives from acquired companies are only tied up for two or three years.
If Lore doesn’t stay for all five years, he’d forfeit a chunk of his giant payout both in cash and stock. A portion of the $3 billion in cash Walmart is coughing up will be paid out over five years. The same goes for the additional $300 million in stock tied to the incentive plan for Lore and other Jet executives.
Lore could make an estimated $750 million to $1 billion, with a B, if he honors his full agreement.
The length of the commitment is just another signal of how big of a bet Walmart is making on Lore, a serial entrepreneur who raised $800 million in financing for Jet and agreed to sell it just a year after its public launch. He’ll be running both Jet.com and Walmart.com after the deal closes later this year and will report directly to Walmart CEO Doug McMillon.
The deal terms also underscore how different this acquisition looks from Lore’s last acquisition, when he sold Diapers.com’s parent company to Amazon and left after just a little more than two years.
In that instance, Amazon wanted the company, Quidsi, mainly for the business. In this instance, Walmart is paying up big in a bet that Lore can help close the gap between Amazon and Walmart.com. It also expects to eventually port over some Jet technology, including a creative pricing model, to Walmart.com and thinks Jet.com can grow into a popular destination for younger shoppers.
Unsurprisingly, Lore is saying all the right things now during the engagement phase.
“This was about trust between Doug and I,” Lore said earlier this week to explain why he did not seek bids from other companies once Walmart showed interest.
“I’m really excited to carry this vision out over the next five to 10-plus years,” he added. “This is a historic, once-in-a-lifetime opportunity for me and the team.”
People who know Lore well still wonder how well he will do in Walmart’s big-company culture, where the vast majority of revenue still comes from brick-and-mortar stores. These people also question whether Lore can get a larger organization to move anywhere fast as Jet.
He has at least five years to find out.
This article originally appeared on Recode.net.
See More:
