Yahoo’s Marissa Mayer to Make $186M from Verizon Deal
wsj.com
wsj.com
Regardless, objectively Yahoo failed and she bears a large share of the responsibility. Absurd reward for botching a lot of the sale, operations and core of that company. I think she tried hard but man I wish I got 9 figures for effort.
EDIT: Haters out in force I see. The share price was $16 when she started. It's now $48. It's irrelevant what she did or didn't do to get that. That's the fact, and that's what matters to her employers, the shareholders.
Why shouldn't she be compensated for a 200% increase? The company's long term survival is a goal that may have never been shared by the actual owners.
Here's one of many Matt Levine pieces that explained the Yahoo/Alibaba situation, although it's now dated: https://www.bloomberg.com/view/articles/2015-01-28/yahoo-wou...
Just because she resorted to something other than organically growing the business to increase the value to her shareholders doesn't mean she's a failure. We're all assuming that her job was to "save" Yahoo. I don't think that was ever really on the table.
> she resorted to something other than organically growing the business to increase the value to her shareholders
Parent comment:
> and such stock was acquired before she became CEO
She didn't do "resort to" anything. Yahoo made that money from an action a previous CEO was ultimately responsible for. If you want to be really generous, you could praise her for not selling the stock—but if we're praising CEOs for every way they choose not to change the companies they come into, then my pet rock would make an awesome CEO indeed.
You have to give her credit where it's due: she saved the Alibaba partnership from that total fuckup, Carol Bartz. CB was such a fuckup, that she's the sun to Marissa's candle. She insulted Jack Ma in front of his underlings when he came calling to Sunnyvale. She refused/forgot to put someone on BABA's board and totally ignored Ma. As a result, Ma said 'fuck you' and took Alipay out of the group without even telling Bartz.
I wish more people looked at the period preceding Marissa (Bartz, Thompson) and they'd realize that Mayer was a Godsend compared to the cabal of clowns running Yahoo before her.
Her job, presumably, as the CEO was to convince all of the enterprise's employees and customers that Yahoo would be sticking around for the long run. At the same time, she had to prepare to wind down the business while returning capital to the shareholders. I would call that a difficult job.
My lesson from this is most companies with excess capital should make investments, not acquisitions. Most certainly a company with a long string of failed acquisitions should. Yahoo has been repeatedly given as an example, but others like Google don't have a particularly great record either. Berkshire Hathaway is a great example of a massive business centrally owned by a very barebones team (in Omaha.)
By allowing those shares to accrue and not doing anything stupid at the wheel, she did her job. Whether or not it's fair or worth her comp, is irrelevant.
The shareholders valued her work at a set amount and that's what she was paid.
Unless you're taking an economic stance on the issue, wherein you believe shareholders are messing up future incentives and economic prosperity by recognizing and rewarding CEO's that do the bare minimum of "just don't fuck it up," or something similar, this debate is impractical.
I hadn't been following Yahoo that closely, but was vaguely curious about the whole Alibaba angle, thanks for linking that article
Haters out in force I see. The share price was $16 when she started. It's now $48. It's irrelevant what she did or didn't do to get that.
The goal of a resurgent Yahoo seems to only have been one shared by outside observers.
When does this ever end
Curious to hear more on this. Yahoo! was a disaster before she came in, she tried some things to turn it around, it didn't work.
One of the arguments for this kind of compensation in this situation is that you want the CEO to take a risk to try to turn around the company. A high profile "failure" like this also means she won't be able to get a job for awhile so you're compensating her for that.
The problem is that we don't know what the alternate universe holds, where a different CEO was brought in. It might be that that most likely scenario was that Yahoo! drops to $0 and Marissa actually made $5B for investors that an average CEO would not have made (in baseball terms her VORC [value over replacement CEO] was $5B).
A high profile "failure" like this also means she won't be able to get a job for awhile so you're compensating her for that.
Edit: I'm not angry at Mayer at all, I just don't understand why companies agree to golden parachute deals like this for failure. She took a career-ending risk, that's worth some compensation, but the scale seems disproportionate.
Because "the company" that decides is the board -- and these people rub each other's backs...
Pure speculation, but I highly doubt that someone as highly touted as Marissa Mayer will be out of job offers for quite some time. A lot of people will attribute the failure to turnaround Yahoo on Yahoo itself rather than on any of the reported shortcomings of the CEO.
Certainly, I think the odds were stacked against her, but if the stories from various reports from inside sources and journalists over the last few years are true, I'd be cautious about absolving her responsibility from the eventual outcome.
What exactly did she try? Because I haven't seen any effort but BS from Yahoo all this period.
$180 million for "not being able to get a job for a while"?
- making a personalized/customizable search engine.
- making a browser, in hindsight maybe they could've worked with Brendan Eich on brave.
- structure like Google with subsidiaries (even if not formally) and have technology and entertainment as 2 businesses.
- really tighten up security on the tech side; damn.
Then see what works and iterate. Selling Alibaba and Yahoo Japan at the end of this; Yahoo basically had negative value.
IDK, selling to Verizon and then having your value slashd-- Twice, when multi hundred million accounts are breached and getting raked over the coals on valuation was a sad finish. To her credit; I like to believe the sale was poor because she wanted to keep going and didnt expect to have to firesale the firm, but I don't know. Obv. Yahoo wasn't "just her" but they were in a poor state so she probably had a lot of operational latitude. It's super rare; if it even ever has happened; that a company is so desperate but still so powerful-- that they give up that much control. Being a total outsider and having those resources and a canvas not blank, but so f*Ed that you can really try anything; that's once a decade maybe.
A browser like Brave would have been a good move, particularly in junction with tightening up security on the tech side. It would be like doing community service to try and right the wrongs of the past, or something, ha!
The problem I saw with Yahoo! was that it was a business with no focus. They acquired Tumblr... and then did nothing with it, which was perplexing. Tumblr has a youth market, and if Yahoo! had actually done stuff to improve the Tumblr experience, they really could have put that $1 billion they wasted in acquisition to use via marketing/ads. Hell, maybe they could have somehow capitalized on Vine folding and turning Tumblr into a bigger video platform (the layout loans itself well to it.)
I also think we agree that there was a lot of verticals to explore and strategies to employ but hers turned out to not be a good one. I think it was possible
Tumblr acquisition was great theoretically, but the social interaction has changed to more rapid social platform like Instagram and Snapchat by the time the acquisition went through (I used to use Tumblr daily with my ex-girlfriend and it was our preferred social platform).
I believe those series of acquisitions were made just to bring on multiple mobile-experienced teams into Yahoo. The product didn't matter, but hiring teams of proven Mobile-UI/UX/Devs did.
Frankly, she did what she was supposed to do: sold the company, satisfied Carl Icahn, and improved internal morale. From what I heard anecdotally, she took an internal culture of rot and at least made it a place where people didn't dread going into work every morning. It's kinda like she pulled the teams out of the swamp, and rested them on a muddy, cold bank of the river. At least they weren't drowning anymore.
The pivot to mobile-first was a big deal, internally. They really lived and breathed that change, as is evidenced by the tremendous amount of engineering they put into simple things like their mobile weather app. It didn't ultimately work, but it was the right direction to be going, honestly.
Was it all misguided and doomed from the start? Sure! Yahoo! was the new AOL, and it was a miracle the company didn't get sold off to a media firm. But then, Verizon is kind of building its own media arm, and it already owns AOL. The fact that anyone bought Yahoo is a testament to Marissa's leadership. Would you have bought it, given the opportunity? I probably wouldn't have either. But she made the sale. If nothing else, that golden parachute is a commission just for ending the damn place as a going concern.
One of the things that really killed Yahoo, that no one talks about, is that they had these security people called Paranoids. They were great, super smart, always available, BUT, they held sway over everything and it was very very easy to just say, "naw, forget that 6 months of work, throw it all away, the Paranoids say we can't put it on production machines."
This was evidently an entirely acceptable thing to happen, internally, and it's why so many things were killed. It's also why you don't hear about constant data breaches at Yahoo! anymore, though.
Did this group of Paranoids hold product-blocking sway after or before the highly publicized Yahoo! hacks? Lose-lose no matter which branch of the analysis tree we traverse.
https://www.cnet.com/news/lord-of-the-paranoids-new-yahoo-se...
I'm pretty surprised to hear that Yahoo had a security team with that much influence, given their leak of over 1bn accounts and subsequent failure to disclose that information for 3 years.
https://www.theguardian.com/technology/2016/dec/14/yahoo-hac...
I'm surprised Yahoo cared that deeply, but blaming that team for its failure is completely missing the point.
Companies will line up to hire her again.
The best they could do was give it a graceful exit..
I much prefer to go in with the mindset that she tried her best but the situation was unwinnable.
The yahoo brand no longer exists. I think if you randomly choose someone on hn they could have at least saved the brand name.
As a user, I found almost all of the changes made to sites like I once used (like the main page or flickr, or the finance page) to be worse than before she was there.
She did some very bad hires such as Henrique de Castro who in 15 months got over 100 million in salary, stock and severance.
She wasted billions on acquisitions that did not add value.
The comments from Yahoo employees since she was hired were never very good, and her behavior with employees was said to sometimes be somewhat bizarre (such as reading a children's book at a comm meeting)
I agree that she likely never had a real chance at fixing the company, but I don't think that proves that no one couldn't have improved the company.
For example, let's assume she couldn't become CEO of something near the level of Yahoo again (which I think she still could possibly, although perhaps slim). I still bet you at the lower end that there would be plenty of 5MM-25MM/year revenue companies that would love for her to be CEO, if not for the press and connections she brings to the table. At that level it becomes whether she wants to accept a salary that she probably would make off the interest of her net worth alone.
Why would anyone?
That's what I don't get about these people. I'm not saying they should retire, but they can still keep their professional connections and a semblance of "work" life by sitting on various boards or doing non-profit stuff, and not actually have to deal with the humongous stresses of C-level work.
I mean let's be honest: $186M is enough to last Marrissa's descendants forever and ever. If I were in her position, I would figure out a way to make my exit. It's not like she's the founder of Yahoo so there won't be any emotional or moral attachment.
If I had that kind of money I don't think I would still be able to put a value on my time.
The thing is, the reason you think this way is the same reason why you won't be as successful as her. Because by the time you make your 1MM, you won't take these big risks any more.
Money was clearly not the issue. She was at Google very early and ended up VP. Clearly she didn't need the money.
If you define success as "has money" then yeah, probably. But that's okay, I don't need nearly as much money as MM. Money, after all, has significant marginal utility. The difference between having $10M and $50M is not that much, unless you have extremely expensive hobbies.
That seems counterintuitive to me. As a CEO, she was responsible for the company's direction. If Yahoo failed, she is responsible and that should affect her employability or at the very least, her worth to a potential employer right? What makes her deserve a reward instead? I know it is part of her contract and all, but I don't understand why an employer would have such a contract in the first place!
What would it have taken to make Yahoo viable again? I don't know if anyone could have done it.
Now the next best thing is a sale and that appears to have been a success of sorts.
Could they have chosen a c-level that would take zero in the event of a sale? Perhaps. But they did not.
You'll be missing out on the opportunity to sell a $600 dongle accessory that converts left-curved banana into right-curved ones by rotating them 180 degrees.
We need headlines like this to highlight such absurdities.
She took over Yahoo on July 16th, 2012 when Yahoo's stock price was ~$16. It's now trading at ~$48. That's about a 3x.
Google over the same time period has done about a 2.8x.
Microsoft over the same time period has done about a 2x.
There are 100 HUGE reasons BESIDES Marissa that we can account for their shareholder success eg (1) they were trading at a lower PE than market competitors (2) they had a huge Alibaba share that was worth more than the entire Yahoo company when she took over (3) MSFT offered ~$45b in 2008 which means their ~$46b current enterprise value is a huge 9 year failure!
BUT I think that Marissa played the critical role of "responsible adult" that gave the market a reason to let Yahoo survive as an independent.
She had a huge brand name that she lent to Yahoo, and each of the 3 reasons I list above were to the board's detriment.
If anybody should get the fuck you it should be the Yahoo leadership of the mid-2000s, and the board's leadership since then.
Imagine if you owned a convenience store that had a vault with $40 billion in gold bars inside. Your business would be worth $40 billion, despite being a convenience store.
Not if you owed $12 billion in taxes on those gold bars.
(I think the metaphor has been stretched to the limit...)
Thinking there is no way this would work, I signed up for a new account with that email address and used it to recover the password for my old account! I must have made up an address when they pestered me about a backup email.
Here is what shocked me: 1) Forgot your password page hung several times. It sat there for minutes and I had refresh and go at it again. 2) New account - verify phone with a code. The page to submit the code would spin and time out after a few minutes. After a few failed attempts they wouldn't let me try anymore - but they still let me log in. Did I really verify my phone or skip it? I don't know or care. 3) I found the group I needed to use. I couldn't find a button to post or join the group. I googled. I had to log in on my phone to get a Join button - there isn't on on a PC.
Yahoo is falling apart. I knew nobody cared about yahoo, but I didn't know until yesterday that the people at yahoo don't care about yahoo.
They could have taken 86 mill out of that and distributed it among their engineers and top performers. She would still walk away with 100 mill and lives of so many people would be significantly improved.
That's ~10k per employee after all the lay offs this year. Last year, it would have made ~8k per employee and even less the year before (only counting full-time workers which inflates these numbers). And it would be even less if you take into account employer taxes for all salary raises.
I personally don't understand this "redistribute CEO income across all employees" mentality because in reality there are very rare occasions where distributing the income leads to any substantial raise in the living standards of the employees. I do believe that she should have done that as a leader, but in terms of what is just/fair/etc, I find the redistribution of CEO income argument to be rather fallacious in most cases!
Note: I am not saying that there are no cases where your argument stands to reason but this is not one of them.
https://www.statista.com/statistics/260291/number-of-full-ti...
Edit: There is a post at the front page now about how 6 fig salaries are low income in SV. Adding a few thousands to that does not improve lives as much as you might think!
Are you saying it's not worth doing if it isn't a "significant enough" amount?
What happens if the money is distributed according to effort and productivity?
I didn't say that it "absolutely has to be evenly divided".
> What happens if the money is distributed according to effort and productivity?
It is. Just not according to what YOU think is just or fair. And here is the kicker, what you think is fair is not in-line with what the board and shareholders think is fair. Do you think any employee @ yahoo has created more value than Marissa? if so who? She clearly didn't steal that money but instead created the opportunities under which such a deal was constructed that allowed her to capture that sum.
From the outside, it is rather easy for you to make some fictional judgement. But it is important to understand that her pay, just like all other employees, is a function of how much value she can capture of the total productivity/profits she bring in.
Who are you to make this judgement? Would you feel the same way if you were being considered for a payout? And how does paying Marissa Mayer all that extra money raise her standard of living? Paying out windfalls more equitably is itself a worthy thing. Sure, some of the money will be "wasted," but it's not for you to judge whether anyone is worthy.
It is up to the board and shareholders to decide what level of compensation they are willing to put up with. But talking about redistribution of CEO income leads to substantial raise in living standards is MOST OFTEN purely fictional!
B: Yahoo has thousands of employees. Even if you only gave it to the top tenth of employees, we're talking a $10K bonus. Nice, but probably not going to move life significantly.
She also knew that if she failed, her reputation would probably be shot, and she'd never get a chance to take a job that was challenging enough to pique her interest, so she negotiated a contract that made sure she was compensated for the risk to her reputation.
She should be commended for her shrewd negotiation skills.
Before a CEO takes a job, they negotiate well for the negative outcome (which usually ends their business career, and begins their political one).
forgive my strong language but i think it's justified in this case. i don't mean this as a personal slight against you, but you just made a statement that is exemplary of the broken culture that leads to outcomes like this. we ought not to accept this as normal. just because it's what currently happens does not mean it is what ought to happen.
How many other Yahoo workers are also losing their jobs? Which of them are getting compensation packages like Marisa Mayer?
I'm coming from the opposite angle because I never took courses in morality in school or spent much time thinking about out of school.
I did take a lot of economics which leads me to believe that the current system is 'fair' in that it's likely just free market forces driving these insane payments.
I do see the argument that no individual has a need for this much money. And, there likely won't be a substantial drop in peformance incentive if there was a sort of judicious salary ceiling implemented. The result of this regulation would be more money to be distributed to shareholders (the rest of the world).
Thank you.
It's more "which usually pauses their business career for a year or so while they work the recruitment gig, living off their golden parachute, and somehow manage to convince another company that they won't turn them into the same trainwreck they made of their last employer".
There is an agency problem with management. CEO pay is not connected to performance and there is no way to effect accountability especially for mid and long term interests. When hundreds of jobs are removed to save 10-20 million a cacophony of commentators chime in with sincerity about 'shareholder interests' yet these 'interests' don't seem to care when hundreds of millions are lost to non performing CEOs who take the brand, value and long term prospects of the company down with them.
Billions lost to fines for fraud, brand tarnished, management continues sticking on and yet not a peep from shareholders. It seems we make the rules and arguments up as we go along, as long as it benefits entrenched interests.
It makes sense why a massive payout would be valuable in contrast to the billions of dollars in unlimited upside rewards a share price uplift would bring.
Marissa Mayer spends $1.1 billion and makes ~0.2 billion. It almost seems like her bonus is tied to how much she spent on acquisitions.
Just because a company failed, doesn't mean the CEO ran it into the ground. Is it possible that the company just didn't have any chance and that she actually did pretty well?
I mean, even high level employees joining a beleaguered companies don't get big payouts if they fail or the company goes under. Why should it be any different for the C-suite? You should only get a big payout for success.
There are loads of overpaid executives in tech and no-one else gets as much hate as Marissa does. The main other unliked executive is Sheryl Sandberg who's also missing a Y Chromosome.
I agree that Yahoo was a sinking ship from the start, and ultimately I think she may get another shot at CEO because of that.
I don't know if Mayer was the best person for the job, but at the least I can't say she was appreciably worse than any of the previous Yahoo CEO's.
The larger issue is the one of CEO compensation in the first place.
Good for her. She deserves every penny.
That company was a shitshow.
Who decided the Board of Directors compensation? The CEO.
Follow the money.
Who paid the $186M? The shareholders.
Who negotiates the maximum compensation for themselves? You, me, Marissa Mayer and 7 billion other people.
Who are you blaming here, and who made poor decisions (if anyone) in this whole epic tale?
Shareholders vote on the BOD candidates after they have been selected by the Board.
Do you really think the Board will nominate someone is going to cut their compensation?
'Good' CEO's deserve expensive exit packages EVEN if they fail.
The expected value of a company under the leadership of a 'good' CEO and an 'average' CEO is substantial.
In the absence of alternatives, the board of directors should be willing to compensate the good CEO up to the difference in these expected values. Let's call this difference EVdiff.
The final negotiated contract value depends on the alternatives 'good' CEO and company have available to them. Because there are so few 'good CEO candidates, the two parties often arrive at a fair, final contract value (CV) that is a large fraction of EVdiff.
Once the company and CEO have arrived at a contract value (CV), they must negotiate whether this compensation will be paid on a performance basis.
The company's rational preference is to make compensation 100% performance based because it will lead to better performance. I.e. 'Good' CEO only gets paid if they succeed, and the amount they get paid in those success outcomes is CV divided by risk
The 'good' CEO's rational preference is to get paid CV regardless of outcome because volatility is bad for the individual.
The parties end up negotiating a fair outcome that falls somewhere in between. Because EVdiff is so large in public companies, this usually means a hefty payment even in the failure scenarios. However, what's critical to understand is that this is FAIR as long as the expected value of the contract (as a whole) is equal to or less than CV.
Running a company is inherently risky. You can't judge the fairness of a CEO's exit package based on just the end result.
Whether an exit package is 'fair' requires an understanding of the TOTAL expected value of the CEO's negotiated contract, and whether that TOTAL expected value was less than the added value that CEO brought to the table compared to their best alternative.
Defined in that manner, was MM's exit package 'fair'? Nobody in the public has enough information to answer that. We need to know what her entire package looked like, what other candidates the CEO's were considering, what those candidates negotiated packages would have looked like, and how their performance would have differed. The last point (on performance) is the part that I am most skeptical of any public bystander being able to judge accurately. The vast majority of us (myself included) don't know what it takes to be a public CEO. Heck, I doubt most of us would even be able to accurately guess what their material day-to-day work looks like.
I know we all expect a "Great" CEO to lead the company to world domination, but Yahoo was a sinking ship before she got there, and she was was able to turn that around enough to create an acquisition. By every measure that her employers where using to judge her performance, she was a tremendous success.
Call me when you create a 200% increase in value over 5 or so years.
She did however, buy Tumblr (huge failure), ruled against remote work, drove a mass exodus of engineering talent, oversaw Flickr's hideous decline, and sat in the leadership seat for multiple hacks.
About the only thing she can claim is that she didn't commit fraud.
The general approach appeared to be to make things look prettier while destroying their usability.
If there was anything she actually improved, I missed it.