Rumor: Youku Suffers String of Employee Resignations
ChinaVenture, 1/11/12
Chinese online video site Youku (NYSE: YOKU) has reportedly seen a recent spate of resignations, including employees who were with the company in its startup days. The resignations reportedly stem from internal frictions and low employee compensation at the company, and from the company's repeated failures to honor promises made to its employees.
One outgoing employee cited internal struggles and low pay as his reasons for leaving, adding that a number of mid-level and long-standing employees had left following the site's IPO for similar reasons. "Before the IPO, the company talked up employee stock options, but afterward it turned out that options were heavily diluted. Outsiders think we struck it rich overnight, but between the 18:1 ratio and the drops in the stock price, we'd be lucky if any of us made enough out of this to buy a small car." According to the employee, Youku founder and CEO Victor Koo is known to employees as "the old fox."
"Victor Koo may have gotten rich and famous off the IPO," said a current Youku employee who requested anonymity, "but everyone else is complaining that they were left holding the short end of the stick. Koo holds 41.48% of the shares himself - the rest of the senior management, like Liu Dele, Frank Ming Wei, and Zhu Xiangyang, don't even have 1%. And now that it's finally reached the point where they can cash out their shares, Koo has issued more stock, which has caused the share price to continue falling and has locked up the shares employees hold. Since the founding employees started leaving, Youku has been refilling mid-level management by parachuting in new managers."
In late 2011, marketing VP Chen Ying and director of promotions Wang Jing left Youku's 20-person marketing division, which had only one VP and two directors, leaving behind only one director from before the company's IPO. Few other old employees remain on the marketing team, and the situation is reportedly similar in other divisions.
The original pre-IPO stock options issued to Youku employees were reportedly recalculated prior to the company's IPO to count 18 shares as a single shares - meaning that employees hold 1/18 of the original number of shares.
A Youku employee confided that the majority of employees were working halfheartedly, while increasingly fierce internal arguments about small matters have degraded the company's reputation within the industry.
Editor's Note: In response to the rumor outlined above, a representative of Youku contacted Marbridge with the following statement: "The rumor alleging mass departures of Youku employees gives an inaccurate account of Youku's corporate structure and stock ownership. Rather than resigning, as the article claims, one of the two employees named in the article was fired, and the other left after failed projects. Also, as a matter of public record, Victor Koo holds less than 20% of Youku shares. Youku has, by any measure, the lowest turnover rate of any major Chinese internet company."
Keywords: Zhu Xiangyang Wang Jing Victor Koo Internet IPO online video Youku Chen Ying YOKU HR Liu Dele Wei Ming stock option
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