Mayer $23M golden parachute as Yahoo names post-Verizon deal executive team

http://www.cnbc.com/2017/03/13/yahoo-names-post-verizon-deal-team.html

by richardboegli • 9 years ago

82 110 9 years ago

cnbc.com

jjtheblunt• 9 years ago

Absurdly ridiculous.

ska• 9 years ago

... Otherwise known as "industry standard"

frgtpsswrdlame• 9 years ago

Perhaps the industry standard is absurdly ridiculous.

nodesocket2• 9 years ago

In what sense? 3 million cash for an executive of a high profile public company that's quite a conservertive cash payment for that scenario.

hn_throwaway_993• 9 years ago

The fact that "3 million in cash and 20 million equity" is considered a "conservative cash payment for that scenario" is basically the point: failure on a large scale is rewarded with grotesquely obscene riches while the peons are told to eat cake (or, rather, to stop buying iPhones so they can afford health care).

throwawaysbdi• 9 years ago

Its absurd for the highest paid employee to be paid more than 10x the lowest.

It's not like a CEO is a hundred times smarter than the people one level below. The reality is that any of the executives could do the same job. At larger companies, what the hell is the difference between managing a division of 500 people or the whole company of 2500? Once you get to numbers that big it doesn't make a difference.

VikingCoder• 9 years ago

Quick reminder, there is no correlation between CEO pay and performance:

http://www.motherjones.com/files/blog_ceo_pay_performance.jp...

ilyanep• 9 years ago

I wonder how that chart measures "CEO pay". Since the majority of executive pay is equity (in this case, $20m of the $23m quoted figure), I'd say that CEO performance (as measured by stock returns) pretty directly affects their pay?

hnbroseph• 9 years ago

meanwhile, the median wage is ~ $30k.

things are only getting worse.

Upvoter33• 9 years ago

that is a sweet way to fail. don't blame her, though. there is only one real solution to this problem, unfortunately: much higher taxes once you start raking in absurd dollars. odds of that happening in US in near future: low.

dottedmag• 9 years ago

Don't you think CEO compensations will be even higher to compensate for higher taxes?

toomuchtodo• 9 years ago

You're going to burn through company coffers quickly if the top tax rate is 90% at some income threshold around 7 figures ($1-9 million/year).

Precedent: http://www.politifact.com/truth-o-meter/statements/2015/nov/...

"In 1944-45, during World War II, couples making more than $200,000 faced an all-time high of 94 percent. Sanders said income tax rates under Eisenhower were as high as 90 percent. A look through the records shows that top earners in the eight years of Eisenhower's presidency paid a top income tax rate of 91 percent."

setum• 9 years ago

Ah, another bureaucratic solution. As if these work? Companies will start buying their CEO luxury apartments, yacht, etc...

BTW this has been tried before: https://en.wikipedia.org/wiki/Revenue_Act_of_1942

It was then, that the employers started giving free insurance to get around wage cap, and seedlings for present healthcare mess were planted.

https://www.ebri.org/publications/facts/index.cfm?fa=0302fac...

neogodless2• 9 years ago

"You get what you incentivize."

If you want efficient production, you don't tax production. You tax consumption. While I may personally think million dollar paychecks are silly, and that the value created doesn't align with the compensation, I'm not convinced that increasing taxes along with income (i.e. loosely correlated with production) is the way to go. Instead, tax consumption.

In other words, if you're going to get taxed all to hell to buy a pointless yacht and $250 million homes, you might not want to do that, quite as much, so you might not care as much about making an extra $20 million, so you might not negotiate such an obscene paycheck. (Maybe you'd even care more about the value you bring to the table and the humans in the picture.)

thrownblown• 9 years ago

And if you want to start a yacht building economy, remove those taxes on yachts and those with the means will buy your country's yachts.

mybrid• 9 years ago

History tells a different story. When the income tax was first implemented it was not long ere any income over one million dollars was 100% taxed. During Eisenhower's two-terms in the 1950s the top tax bracket was 75%. It is interesting to consider that when the modern conservative wants to return to the American prosperity of the 1950s if, like you, conservatives would be willing to return to Eiesenhower's tax brackets and tax production.

A better historical argument can be made that America should have never switched from a dividends approach to the stock market during the late 1970s. Our current system rewards quarterly gains for long term losses and this has lead to the various bubbles. I can easily argue we should return to Eisehower tax brackets and also a dividends approach to stock market gains and in doing so history is on my side.

ksherlock• 9 years ago

In 1993, there was a legislative attempt to limit CEO pay by capping the deductibility at $1 million (the company could pay more but it would not be tax deductible as a payroll expense). That $1 million number was the average CEO compensation at large firms, which ought to tell you all you need to know about the effectiveness.

danso2• 9 years ago

I'm assuming this amount was agreed upon before she accepted the job at the helm of a company that was expected to go the way it did, e.g. split from its most valued asset, Alibaba? I don't see that as being a "reward" for failure. Although I do wonder what was the point of having a high-profile CEO when most shareholders were waiting to cash out on the Alibaba sale?

In 2013, Bloomberg estimated that Yahoo's non-Alibaba worth was "as little as $4 billion" [0], so getting sold for $4.4 billion 3 years later isn't success, but it isn't abject failure either.

[0] https://www.bloomberg.com/news/articles/2013-10-16/how-much-...

rayuela• 9 years ago

That's an annual return of 3.2% during a period of time when the S&P500 did 18.9%. That's a pretty shit return if you ask me.

danso2• 9 years ago

The 10-year chart of Yahoo's stock shows that the company had sunk to a plateau of ~$15/share from 2008 to 2012, after peaking at $31 in 2007. I'm assuming the stock's steep rise post-2012 was related to the anticipate sale of the Alibaba stake: https://finance.yahoo.com/chart/YHOO#eyJtdWx0aUNvbG9yTGluZSI...

Maybe the rest of the market was growing, but it didn't seem like Yahoo sans Alibaba was heading in that direction.

gloverkcn2• 9 years ago

People who are criticizing Mayer's deal are failing to realize that Mayer had better options than taking over as head of yahoo. She was a bright star who could have gone to any number of companies.

Nobody in the tech community would have categorized Yahoo as "ready for a turn around". Companies that large that have been mismanaged for so long are filled with middle managers that are better at internal politics than driving initiatives. The odds of yahoo turning around were extremely low. They had to put a deal together to entice someone who had a good reputation from a leading tech company to put their name on the line to go try and sort out a giant mess.

If your gripe is the difference between her salary and the lowest paid then I understand. That doesn't mean you bash Mayer for playing by the rules that society has set up. Good for her for getting paid. That makes you no different than the middle manager who isn't helping their team push forward but instead is sitting in meetings taking pot shots at everyone else.

Support a law that says the top executive can't make x times the total comp of the lowest paid. Of course every law like that will create incentives to structure companies to maximize payments to execs. those conversations would add more to our discussion than just throwing rocks.

iaw• 9 years ago

People who are criticizing Mayer's deal are failing to realize that Mayer had better options than taking over as head of yahoo.

Could you provide sources for this? What opportunities were available to Mayer better than being an executive of a multi-billion dollar giant like Yahoo?

Edit: I'm seeing a lot of speculative replies but none that demonstrate an 8 to 9 figure payday from 5 years of sitting in place. Does anyone have an example of an alternative that would've yielded her this much wealth?

kornish2• 9 years ago

Well, for one, being an executive at a multi-billion dollar giant which was growing or doing well.

edit: by "executive", I was including the whole C-suite – should have clarified.

viggity• 9 years ago

One option would be to continue to work as an executive at Google, where she was already working. I would have to imagine that Vice President of Search Products at GOOGLE would be able to find a cushy gig just about anywhere in tech.

mikeyouse• 9 years ago

I imagine any unicorn in existence would have jumped at the opportunity to have her come in as COO or CEO if it wasn't Founder-led.

grandalf6• 9 years ago

Could you provide sources for this?

Do you think that Yahoo's board decided to grant Mayer the golden parachute out of kindness, or out of sympathy to a fellow member of the nobility?

Mayer and Yahoo's board negotiated the terms of her contract. The parachute is meant to lure an executive who would normally not want to risk taking the helm of such a high risk company.

compiler-guy2• 9 years ago

It's not just the opportunities that were on the table at the time, but also declining all future opportunities if this venture failed.

You get one shot at a job like this. The company making the offer had to make it worth her while to

A. Leave Google, and while she wasn't the top dog at Google any more, she was still extremely well respected, and incredibly well compensated, and--perhaps most importantly--very, very safe. What would it take for you to leave a job like that?

B. Spend her one shot at the ultra-big time at a company near death, where it was likely that she couldn't save it, regardless of what she did.

Yahoo had to offer her the big bucks for to take a risk like that, and one part of reducing the risk to her is to give her a golden parachute, where regardless of whether the venture succeeds or fails, she is still better off than at her old position.

And you have to make all the numbers risk-adjusted.

All of this negotiated _before_ you know if she is going to succeed or fail.

Yahoo wanted her that badly and spent what it took to get her.

ue_2• 9 years ago

Support a law that says the top executive can't make x times the total comp of the lowest paid.

Or support a law that means that you get paid for as much as you work. That makes more sense, no?

yellow_postit• 9 years ago

How do you propose to measure this?

FLUX-YOU• 9 years ago

If we did, I'm pretty sure Torvalds would get all the money anyway

phaus• 9 years ago

How was this even a good deal for her? Didn't the fraud she hired and was immediately forced to fire get $60 million as a severance package?

I know I'd like $23 million for getting fire, but I'm just a regular person. I thought she would get significantly more.

xiaoma2• 9 years ago

She lost some of her expected bonuses due to the repeated security breaches that compromised user accounts.

http://www.recode.net/2017/3/1/14783686/yahoos-lawyer-ousted...

product502• 9 years ago

You are wrong. Before joining Yahoo, Marissa was demoted from her position and no longer was in Larry's inner circle. She pretty much had her hand forced to quit Google given the influence she had once no longer remained.

Wrt joining other tech companies, it is debatable whether she could get a CEO role of $30B+ tech company given she never had such an accreditation before.

Wrt your excuses on why she failed, those are exactly that - excuses. If it is such a common knowledge that middle managers are political centers, why didn't she do anything about it? There wasn't a single round of layoffs at Yahoo in her first 2.5 yrs when everyone was asking why Yahoo needs 12k+ employees to support $4B in annual revenues. She failed to figure out what was wrong with Yahoo and take adequate steps to fix it. In essence she completely failed in her duties as ceos.

I think a lot of frustration here is not that CEOs earn that much. I, for one, am totally fine if Satya Nadella earns $100M+ for all the great work and transformation he has done over at Microsoft. So I don't agree with your proposal on fixing the salaries of CEOs based on a multiple. I think what is frustrating here is that here is a CEO who clearly failed across the board and did nothing noteworthy (and made huge costly mistakes such as hiring Henrique de Castro which cost Yahoo $100M) but still was seemingly unaffected in securing the CEO role and being paid handsome salary/bonuses.

vonklaus• 9 years ago

Marissa Mayer executed the goal she was brought in for which was to create positive market sentiment so they activist investors who brought her in would make significant returns.

That said, obviously it was possible to turn around Yahoo, and the investors, Mayer and the company would be better off if she succeeded. I believe she tried genuinely hard to fix it and I believe she failed harder. Obviously, Microsoft is in a much different position but Nadella has had such success there that you would expect Mayer could've at minimum kept the company from failing.

wwalser5• 9 years ago

Any ah… evidence for that first claim (or any of them really…)? It seems obvious that she would have netted more money if she had just stayed anywhere near the top tier of Google.

Yahoo was a capsized ship before Marissa came aboard. The fact that she got it into harbor at all is impressive enough for me. I always assumed there was a near-zero chance that she would save it from complete collapse.

Making bets that don't pay off is par for the course for a CEO (Bezos & Satya are both great at this), some just have the luxury of huge profit centers to point at when investors come knocking. Marissa made her bets — some worked, others didn't. She managed to get an asset that, for a time, was negatively valued in the market[1] sold for parts. How she is compensated for the feat is, I assume, based on her employer's evaluation of that result.

1. http://www.investopedia.com/stock-analysis/070215/why-yahoos...

st3v3r3• 9 years ago

"That doesn't mean you bash Mayer for playing by the rules that society has set up."

So "don't hate the player, hate the game"?

I've never agreed with that idea. The "players" are adults who are perfectly capable of taking responsibility for their own actions.

tantalor• 9 years ago

Interesting that the future CEO will work out of NYC (presumably the 229 West 43rd Street building) rather than the Sunnyvale headquarters.

praneshp• 9 years ago

I guess the sunnyvale office will remain the tech/core-business part, that is going to Verizon?

harryh• 9 years ago

The Sunnyvale headquarters will be part of Verizon. The future CEO will be managing a company that is basically just a holding company for Alibaba stock.

ChuckMcM2• 9 years ago

So nearly a $100M pay cut from the original exit package valued at "up to" $110M[1]. I still think she is the perfect pick for COO of Uber.

[1] http://money.cnn.com/2015/12/07/technology/marissa-mayer-sev...

M_Grey• 9 years ago

You think she has some kind of fetish for sinking ships?

grandalf6• 9 years ago

I still think she is the perfect pick for COO of Uber.

This is a great idea. I think if it looked like she'd take the position she'd get a call from Larry and Sergey asking her to do them a favor and not take the position so Alphabet would have a chance in that market.

They'd likely be willing to let her be CEO of one of the other Alphabet companies to discourage her from going to Uber.

acjohnson552• 9 years ago

Or CEO. They need a change at the top IMO.

ChuckMcM2• 9 years ago

I was thinking more about the "optics." What says you are serious about sexual harassment in the workplace then putting a woman in the role of being able to evaluate and fire the harassers. I also think Marissa needs a bit of rehabilitation in her career, the Yahoo! period did not, in my opinion, improve her 'brand'. So the COO job where the 'company killing decisions' are someone else's and the execution against goals is all on her, would give her a chance to show that she can move the company to achieve its goals, and thus burnish her reputation for more than just product focus. In my experience watching the comings and goings of executives in tech it's rare when there are two executives that need each other this much.

mindcrash• 9 years ago

Because the Yahoo-Verizon merger is kind of confusing: this is not about the parts (Yahoo.com, Tumblr, Flickr etc.) which are about to merge into Verizon. This is actually about the spinoff containing the assets which will stay separate.

Who eventually is going to run the parts at Verizon (which will not be Mayer) is as of yet unknown I believe.

rl3• 9 years ago

If only I could make that much by reading children's stories[0] to thousands of professionals at a time in obtuse fashion.

[0] http://www.businessinsider.com/marissa-mayer-childrens-book-...

bahmboo• 9 years ago

California + probable 280G = 70%+ tax

test678779• 9 years ago

Question to folks here. Is it still worth joining Yahoo as an engineer (if yo u are not able to manage Goog/Facebook/Apple/Amazon? What are the risks due to Verizon takeover?

SliderUp• 9 years ago

Good for her. A ton of CEOs have done far worse for their shareholders and done as well with their exit package.

Mayer $23M golden parachute as Yahoo names post-Verizon deal executive team

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