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Creating Firm Value as a Team: A New Case Study From Turkey

By Dr. Gulfem Bayram–Executive compensation has been one of the most researched topics in business literature. There is even a sub-discipline within corporate finance that investigates corporate governance and executive compensation issues. Finance literature reports that corporate governance and executive compensation practices are closely related to firm value. While there are many different perspectives to the issue, my focus has usually been on how executive compensation affects corporate value or vice versa.

Yemeksepeti.com

Summer is a time to catch up on research as well as reflect on recent business developments to incorporate them in my lectures during the upcoming academic year. An article by a Turkish business newspaper caught my eye several weeks ago. The article was about the acquisition of a Turkish food delivery company, yemeksepeti.com, by a German corporation, Delivery Hero, at a price tag of $589 million. The transaction went into the books as the largest corporate sale in this vibrant emerging market with a young population profile (41.70% of the total population is 24 years old or younger). Yemeksepeti.com provides an electronic environment to customers and delivery restaurants where the orders and the payments are handled online. It was first established in 2000 when the Internet was fairly new and not widely used in this emerging market. However, the founders of the company had the vision that Internet delivery would become the next big thing, especially in a country where such young population existed. The company initiated its operations only in few cities at the beginning, expanding its services to thirty eight cities by 2015 including some European and Middle Eastern countries. The co-founders of the company were able to create an impressive success story out of a 40 m2 office just in fifteen years with a very modest start-up cost.

Something Surprising

Of course, creating a successful e-commerce business in an emerging market has its challenges, and I am sure that we can learn a lot from this case in that aspect. However, what happened after the sale was a lot more surprising to me, and that is why I wanted to share it with you. The former CEO and the cofounder of the company, Mr. Nevzat Aydin, recently announced that he distributed $27 million from the sale proceeds to 114 employees who contributed greatly to the success of the company from its humble beginnings. This is officially the first time that a CEO /majority shareholder shares such a large amount with his staff after a sale of a company. CNN Money compared this amount with the Wall Street bonuses and concluded that what Mr.Aydin shared with his staff beats the average 2014 bonuses on Wall Street. The number becomes even more impressive when normalized against the salaries of the employees. Average monthly salary for most of the employees ranged between $1000 and $2000 for the company. A total of $27 million in bonuses translate to an average bonus of $237,000 per employee, which is around 200 times of the average employee salary. Receiving such significant bonuses is apparently a life changing event for many employees in the company.

I cannot think of a better way to make your employees part of the family. The generous gesture of Mr. Aydin might trigger a new trend among startup companies to attract better talent and improve performance of the company as a whole. Furthermore, there are already rumors among colleagues that what Mr. Aydin did might become a case study for business schools soon. In the light of such example, discussions on corporate governance, ethics, and firm value can take different routes in finance, management, and ethics courses. After all, executives can only be successful if their teams wholeheartedly believe in their leadership and company’s future potential. Until next time…

Gulfem Bayram, Ph.D.
Cameron School of Business, Assistant Professor of Finance

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