I wonder if there is a performance component to this, or if it's based solely on him sticking around for the long haul.

I just finished up an earn out with performance goals on both revenue and margin, and found it to be very challenging. We ended up making product decisions with only the near-term implications in mind, and I feel it actually stunted our growth in both the near and long-term.

Given my experience, I strongly feel companies should base earn outs on length of time, while giving founders the autonomy to try new things while they are there. I heard Google shifted toward that model over time, but can't confirm. Hopefully Tumblr's founder got similar terms...