Things aren't going so well for Snap (NYSE:SNAP) today, after the Snapchat operator reported dismal third-quarter results last night. As if that weren't enough, Snap is also now losing its engineering chief, Tim Sehn. The Information first reported on the departure, which was quickly confirmed in Snap's 10-Q for the quarter. Sehn told Snap yesterday that he was calling it quits:
On November 7, 2017, Tim Sehn notified us that he would resign as Senior Vice President of Engineering, effective on December 1, 2017. Jerry Hunter, who is currently our Vice President of Core Engineering, will assume Mr. Sehn's responsibilities.
On November 7, 2017, we entered into an option agreement amendment with Mr. Sehn to extend the exercise period for Mr. Sehn's nonstatutory stock options from three months to twelve months after the termination of his continuous service. All other terms related to Mr. Sehn's nonstatutory stock options will remain in accordance with existing terms.
Snap is generously letting Sehn hold on to his options for a full year after leaving, and another executive is taking over Sehn's duties. Sehn's abrupt departure couldn't be coming at a worse time for Snap.
Snap is about to completely redesign is most important product
Sehn was one of Snap's first executives, joining the company back in 2013, just two years after Snapchat was founded. Scoring Sehn was a big win, as he had spent a decade at Amazon.com as a software development executive. Snap poached with him an extremely generous compensation package.
As of the prospectus date in March, Sehn had vested stock options to purchase nearly 6.2 million Snap shares at $0.58, along with options for 2.6 million shares that had not yet vested. Those options were granted when Sehn joined Snap. The departing executive was also granted 46.9 million shares in October 2016, of which only 2.6 million shares were vested at the time. That 2016 grant made Sehn one of the most generously compensated Snap execs last year, bringing home $41.4 million (mostly the equity grant).
Sehn's departure comes just as Snap is in the process of redesigning its core app in order to address long-standing complaints about how hard Snapchat is to use. It's hard to overstate how important strong leadership is when a company is overhauling its most important product, and Snap expects the change to be "disruptive" to its business in the short term.
Taking one from the team
On the earnings call last night, BTIG analyst Rich Greenfield asked CEO Evan Spiegel if Snap's executive team was the right team: "And I guess maybe attached to that is, I guess, for Evan, like in the senior team that you have assembled, not just on the call but overall, is your senior team, the team you need, be the much bigger team or a different team?"
Spiegel responded, "As it relates to team dynamics, I'm very happy with our executive team, but I'm constantly evaluating our team, providing feedback, and we're all working together to grow and drive the business in as productive a way as possible."
Well, the team just lost one of its best players.