Yahoo CEO Marissa Mayer Compensation Soars 69 Percent to $42.1M

It's important to note that Yahoo's board did not give her a 69% raise this year or decide that her performance over the last year was worth more than $42M. This is the compensation she agreed to as part of contract when she joined as CEO.

Ever year we see a multitude of articles highlighting CEOs of poorly performing companies who had a huge increase in compensation, but they completely miss the point. There is no "news" here, per se. It's just like a professional sports player who signs a very large, guaranteed 5-year deal. It doesn't really matter if the payments each year are equal or if they are backloaded so that the player gets a huge "raise" in his final years. Just take the total size of the contract, divide it by 5, and call that his effective yearly compensation.

Now, it is certainly the case that we can debate whether the board overpaid for Mayer, but that's completely independent of this "news".

i dont understand why ceos get paid so much. companies are always trying to cut costs -- we see outsourcing to mexico and massive layoffs fairly frequently -- but ceos never seem to get cut as a cost. when one is fired another is hired and paid just as much. 40 million for being the ceo? how is it possible that you could never find someone who could do the job just as well who would take 20 million?

Can someone explain how this works? Is there any economical logic to this?