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This is not something to be upset about.
Shareholders want near zero executive risk, and so they are willing to pay top dollar for proven executives...
That way, if things do fail, they can be confident that scrimping to save a few million in comp wasn't the reason they lost billions.
We overpay for quality in many areas of the economy. Neurosurgeons are one example. Roughly 0.5 people from each of the the graduating classes of the top 10 medical schools becomes a neurosurgeon. Supply is very, very small because the bar is so so high. Why? Because when someone is doing surgery on our brains we are completely fine with having a 10x overqualified doc doing the surgery.
This is similar to how the price of achieving each additional "9" of reliability is exponentially greater than the last one.
Yet systems with 99.99999% reliability still fail, some neurological procedures fail, and some highly paid CEOs do not lead their companies to glory.
Yahoo's shareholders decided to hire Marissa instead of many other, cheaper options. Nobody was duped, fooled, or scammed. Kobe misses the winning three pointer to lose a game now and then. Mayer is the closest thing the valley had to a sure bet for a company in need of product execution, so it's hard to fault Yahoo for wanting to recruit her.
It's too bad it didn't turn out, but let's hope she does something risky with all the money :)
>Yahoo's shareholders decided to hire Marissa
It was the Board of Directors who hired her, the shareholders are asked to approve (essentially a rubberstamp)
She was far, far from a zero-risk hire. She had only worked for one company, had zero executive experience at the level required at Yahoo.
Enough with the celebrity cult we shower on CEOs - leave it to reality TV starlets.
She'd been responsible for one of Google's most successful products, and had been praised by the founders as a key early hire.
She'd also helped create and shape Google's culture and arguably brought with her to Yahoo several billion dollars worth of Google's trade secrets and operational strategies, not to mention her knowledge of key players inside google who Yahoo might be able to poach to accomplish specific initiatives.
Yahoo had already tried a media exec and its own founder, neither of whom could figure out a recipe for success.
1. Being a good Product Manager does not a CEO make.
2. Her poaching Google stars? She hired and, 15 months later fired, Henrique De Castro, whose "severance package, estimated to be more than $60 million, was one of the largest golden parachutes ever given to a terminated executive" [1]
3. >neither of whom could figure out a recipe for success
Steve Jobs turned around Apple after a couple of disastrous CEO before him (Sculley, Amelio, etc)
Except she didn't perform well. She made constant awful decisions through the course of her four year tenure.[0]
That's always easy for us to say in hindsight.
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I'm not sure what point you are trying to make.
There are two ways to look at Mayer's payday:
1. She is getting rewarded even though her performance as CEO of Yahoo! was way less than expectations. Expectations being the salvation of Yahoo! as an independent company.
2. She is being rewarded for selling Yahoo!
People are focusing on #1, but that is really past performance and past stock grants. She has plenty of previously granted stock based on previous performance, but she did not achieve everything she could have: This past year, Mayer had to forfeit just over 400,000 of those performance shares.
Once the "for sale" sign went up, her incentive became "sell Yahoo!", not "save Yahoo!" because that is what her incentive (severance package) aligned with the moment the "for sale" sign went up.
I expect that the Board understood this very well when they created her severance package.
So she does know how to negotiate, it just has to be for her personal gain.
> Yahoo is also paying to help Mayer land a new job. During her period of transition, Mayer will presumably need office space, and someone needs to pay for it. The company will put up $15,000 for 24 months of outplacement services for Mayer.
> Mayer is entitled to receive her base salary, which in 2015 was $1 million, for two years after she leaves the company.
Clearly she set the same "you get your salary for 2 years after leaving" + office space package up for all the developers in the company...
When you get hired to save a dying company, you shouldn't be slammed for the stock doubling.
> Despite generating roughly $5 billion in annual revenue and drawing 1 billion monthly users, Yahoo's core internet business is valued at less than zero by the public market.
> Instead, most of its value is ascribed to its ownership stakes in Alibaba and Yahoo Japan, which together outstrip the value of Yahoo's $35 billion market cap.
When you fuck over your employees to do so, yes, yes you should be slammed.
The reactions in this thread are bizarre to me. Is it a new revelation that CEOs are compensated to deliver the best return for shareholders, and not the employees? Why is Mayer being singled out when this is what pretty much every CEO in the history of capitalism has been hired to do?
In this particular thread, she's not being slammed for stock performance (although it seems questionable whether she had much effect either way), but rather the "perks" she negotiated for herself as the company got swallowed up by a bigger - and probably less benevolent - entity.
What she did isn't illegal, nor is it particularly unexpected these days. But it is selfish and slightly grandiose. No one is questioning how much she was paid during her tenure, just this fluffy extra crap at the end that makes it seem like she was royalty. While it shouldn't be made illegal, it should be shamed to a degree. Because if not, then where does it end?
you also shouldn't be credited for the investment decisions of a predecessor
The level of attention that these stories about Mayer attract is kind of sad, and really not fair. The big jump in the "payday" that the article teases is the possibility that Mayer will sell already-granted stock. i.e. Not new comp at all. Yawn.
Sigh. There was a story just yesterday or maybe slightly older in WSJ about "short list of well paying jobs" and the only thing I remember was that every second word was "manager".
I have to say my favorite part is how they have to pay her health insurance premiums ($2k/month) for 2 years.
I need to up my negotiation game. :)
Plus, 2k a month? I can't even imagine what amazing Super Platinum plan she must have.
a mid-range plan for a family of 5 here in NC can easily be $1500/month - assuming CA is higher, and she's got a family plan, I can't imagine it's "super platinum" but average.
somewhat OT, but ... is there any value in billionaire's having 'health insurance'? When you are worth more than some smaller insurance companies... what value is there in buying insurance? Aren't you already self-insured? There may be procedures that the insurance company wouldn't fund anyway, but you can just pay for it yourself?
EDIT: Just looked up family of 3 - higher end "blue cross" in CA may be $1200/month. Other companies are cheaper (wow, must be nice to have so many options! in NC, I have 2 options, and only 1 the year before, that's it).
Throw in a dental plan, and that might bring you to ~$1300/month. Add in expected increases over the next 2 years and.. $2k/month is probably still on the high side, but perhaps not by too much? http://www.coveredca.com/news/PDFs/CoveredCA-2017-rate-bookl... shows that there's an expected 13% average increase in 2017.
Because of the way insurance prices are structured post-ACA, if you are old you are getting a big underwriting subsidy. If you are a typical billionaire, it is cheaper to purchase insurance than it is to self-insure, because part of your costs are being borne by younger premium holders. If you are a billionaire in your 20s you should probably self-insure for the same reason.
Under the ACA the maximum ratio between insurance rates for old and young is 3:1, but the Society of Actuaries estimates that healthcare costs for the elderly are roughly 4.8 times as expensive[1].
1: Referenced here on page 22: https://www.cbo.gov/sites/default/files/114th-congress-2015-...
Perhaps removing the 'lifetime caps' on most services changes this?
I'd have thought, for example, if there's a lifetime cap of $10m on services from my insurance company, and I have, say, $50m in an account just for my medical needs, I'm more than self-insured compared to what I'm protecting myself from with insurance. It seems 'lifetime caps' are largely gone for most services now.
EDIT - thanks for your reply.
Is $2k that excessive? I pay the equivalent of about $800/m for 'normal' health insurance in Germany.
Surely you can get much higher than $2k/m in silicon valley.
$800 sounds like a lot, state or private insurance? I earn a decent salary for germany and my health insurance pay is about half that.
Right, CEOs in corporate America make stupid amounts of money. That's how it is.
I would question the motives of anyone describing this as unusual or especially egregious. Are you upset about how business is structured now, or do you have a specific vendetta against Mayer?
I think I'm going to be sick. Compensation for executives should be directly tied to company performance. You want to be at the top, then you should take the risk.
Her compensation was directly tied to company performance. 96% of her compensation was in ownership share in the company. That ownership share is worth $117M because the stock went from $15 to $39 per share while she was the CEO. If the company had tanked instead, her compensation would be less. Considering the outlook for Yahoo!'s core business was so bleak at the time she was hired, who's to say this wasn't one of the better outcomes for the board that hired her? Yahoo! returning to its glory days as a tech giant was pretty unlikely.
The stock prices are directly related to the awesome performance of Alibaba, and lesser Yahoo Japan, both of which they own stakes. Both which were investments prior to Mayer starting. Reading the article, without those two calculated in, the company is actually down $2.4 billion.
Paying her salary for two years AFTER she leaves, including her health insurance, AND office space for her to find a new job. Is completely ludicrous.
Company performance has improved since she got there, check out the stock.
If you read the complete article, it is explained why that is the case and why Meyer presumably is not the one who should get the credit.
Right, because of Alibaba and Yahoo Japan. The company is down 2.4 billion without those two.
why are you littering every comment with the same comment response. Also, the stock has nothing to do with Mayer's performance.
If an executive has a solid plan for long-term benefit that will require three or four excruciatingly bad years to achieve, should the executive be compensated poorly in the lean years for sticking with the company to achieve the long-term goal? Because you're talking about a recipe for optimizing short-term gains at the expense of the company's prospects, and I doubt the work force of most companies would be very happy to have their futures handled that way.
What exactly are you considering being compensated "poorly". ONLY a million instead of tens of millions? If an exec is confident enough to think they can turn a business around in four years, then they shouldn't get the massive payouts until they do so. She hasn't done so. Why do execs still get huge bonus/stock allocations for an under performing company?
http://www.independent.co.uk/news/world/americas/highest-pai...
Would you take a job at a company in trouble and not want some compensation for the risk?
I was asked to look at a role at Hibu (ex Yell) in the Uk and I told the recruiter id want a serious premium and some very good share options to even consider it.
I wonder which lucky company will hook her up now....
Relevant recent story:
http://www.independent.co.uk/news/world/americas/highest-pai...
Good for her. The only thing wrong is that I haven't managed to secure that sort of package for myself!
Human nature whether it be man or woman.
Yep, the saddest thing about this whole thread is that yours is the only comment to even hint at what's unique about this particular golden parachute. CEOs have been reaping outsize rewards for failure since forever. Some have destroyed bigger companies than Yahoo, and reaped bigger rewards than Mayer. Yes, even some in tech. Even in search. Before Yahoo there was Excite. There's plenty of reason to be outraged, but put a slight pink edge on that golden parachute and suddenly the sleepers awake.
Then I looked, and I saw there was nothing new under the sun.
This is unacceptable. She sold off a big chunk of Yahoo (that she could not resurrect) to Verizon where most of the staff is eventually going to get axed and she walks off with $122 Million. There has to be checks and balances somewhere. Tech industry is turning into dirty Wall Street.
You've miss the actual story. Activist investors (Starboard) forced her to sell. She had no desire to sell. The payout was set up to make a sale less appealing to the board. They also set up change in control provisions for the entire company, so any employer who gets canned as a result of the deal has immediate vesting of all invested stock. This will be as high as $1B in cost for Verizon if they fire everyone. Again, incentives against a deal.
Not defending her, but the tech industry isn't turning into something, it's been this way for decades as well. Just because Yahoo! was part of the new wave of 90s and on tech companies, the big ones still end up managed by the same types (and perhaps the same people) as the old tech firms.
To expect better or different behavior is naive. Expect corporations (particularly publicly traded ones) to behave in ways which frequently benefit the heads, and often hurts the laborers.
Well, if you're a Yahoo shareholder, you could have voted against the deal.
If you're not, it's not your money, so why would you accept it or not?
I wonder how strong the connection is between lightly managed retirement funds and poor corporate governance. Pretty much anybody with retirement savings is a likely partial owner of Yahoo (via some broad market index fund), but those funds tend to be managed in a way that they do what the relatively insular boards recommend.
So there is a legitimate question to be answered about poor corporate governance when you tell people that they need to invest their money in stocks to ensure their comfort in later life.
Have you seen the stock? Wallstreet should be grateful.
The problem is that is all due to the Alibaba stake.