Further controversy arises around Huffington Post creator Arianna Huffington as Peter Daou and James Boyce, currently involved in a suit against Huffington, have caused AOL to go public with private documents about the site’s $315 million purchase and Huffington’s slice of the buyout.
The documents were marked “Confidential” and “Attorney’s Eyes Only” and was prepared by Tim Armstrong for AOL board members. The memo was prepared days before AOL announced its purchase of Huffington Post, specifying various business and financial details surrounding the nine-figure deal, and also included Huffington’s “total deal consideration”.
According to the report, Huffington – who started the site back in 2005, received roughly $24 million over the course of the deal. $3.4 million was in the form of other options that would manifest 20 months after the deal closed, and a further $3 million was in the form of stock options and units that resulted from her negotiated employment agreement.
These numbers are a stark contrast to what many media outlets reported at the time of purchase, with some accusing Huffington of pocketing almost $100 million. In reality, Huffington’s share was likely to be less than what was earned by the site’s financial backers (Greycroft Partners and Softbank Partners) and totalled less than 7 percent of the total buyout.
The document places high value to Huffington’s significance to the web site, acknowledging that her withdrawal from the site “could have a significant detrimental effect on the Company’s business.” AOL clarified that specific negotiations were centred around Huffington’s “name and brand” and subsequent “intellectual property rights”.
AOL provided the document at the request of Boyce and Daou due to a subpoena request for details relating to purchase of the Huffington Post. Boyce and Daou claim that Huffington stole their idea for the Huffington Post Website from a memo they circulated in 2004 as Democratic advisors, before being dropped by Huffington.
While Boyce and Daou’s accusations have been considerably restricted by New York State Supreme Court Judge, it has stayed afloat by surviving Huffington’s dismissal motions, the most recent of which involved the inclusion of the AOL memo, required in an attempt to prove unjust enrichment.
Last year, Huffington sat for a videotaped deposition in the case, which has been classified as confidential apart from excerpts that are present in court filings. Huffington’s lawyer originally referred to Huffington’s share of the purchase as “very personal and sensitive financial information” thus objecting when plaintiffs originally asked for details of Huffington’s benefit.