Dissecting Marissa Mayer’s Yahoo Compensation | Hacker News Reader

Dissecting Marissa Mayer’s Yahoo Compensation

nytimes.com

122 pointsmhb118 comments

There are a lot of good points here, but it feels like most of her compensation is explained right here

  To lure Ms. Mayer from Google and compensate her for options she forfeited there, Yahoo’s board offered her a lucrative employment agreement. She initially received restricted stock worth $35 million and stock options worth $21 million, based on 2012 stock prices for Yahoo, along with a cash salary and bonus.

It sounds like Mayer was initially making way more than the 900k/week figure quoted in the title, so it almost doesn't make sense to talk about her performance the rest of the time if we're interested in explaining here salary. There were a couple of significant missteps that the article explains resulted in meaningful pay cuts, but it sounds like the bulk of her compensation was determined from the beginning.

That doesn't mean it's not worth discussing. I could get hired to be the CEO of Ford and get a contract for a ton of money. But I'd do a poor job probably. It would be worth discussing afterward; how did this happen? Why are executive salaries so incredibly disproportionate to their impact and benefit to the company? What can be done? What should be done?

It isn't clear that the salaries are in fact disproportionate. The article makes the case that there were many mistakes, but that it's hard to say if anyone else could've done better. And the shareholders did end up making a lot of money.

I'm not sure anything should be done here. The shareholders chose to pay a lot to get her as CEO. Even if they lost out, it's not a reason to intervene. People make bad bets all the time.

Something must be done to rein in executive pay though. I am not talking about MM in particular. She is probably a fine executive. However, my point is that unchecked executive pay is not good for anyone. We don't live in a free market. There ought to be some way to cap pay.

A progressive income tax that caps out at 90% of income above $3M a year? So if you make $3,000,001, you pay 90 cents in taxes on the last dollar you earned sounds fair to me.

> income tax that caps out at 90%

Kind of like it was in the 50s back when America was "great again"?

I am obligated, any time these very high historical tax rates are mentioned, to point out that these were very special, very specific actions taken to discourage war profiteering during world war two.

The extremely high marginal rates that did indeed exist were not implemented as part of a tax regime nor were they enacted to redistribute wealth - they were a patriotic wartime measure enacted to ensure nobody got rich on war contracts.

They have almost no relation to our current discussion of tax rates and taxation.

Maybe so, I'm not an expert on such matters, but the highest tax rate was 50% or higher from 1932-1986. I would say that is relevant to our current discussion.

You realize that almost no one ever paid 90% or anything close to that, don't you? The tax code that had a 90% rate also had massive deductions.

I think you would need to start taxing equity grants for that to have the effect you want. Otherwise, executives just won't sell more equity than $3m a year. And when they found new companies and non-profits, they'll just grant the equity directly and never have paid any personal taxes on it.

"However, my point is that unchecked executive pay is not good for anyone. We don't live in a free market. There ought to be some way to cap pay."

Why? To all those questions.

I mean, in some specific cases you might be right, but in the case of shareholders, who own a company, deciding how much to pay to the executive that they choose to run that company, why would someone else need to be involved in that decision? Who is supposedly losing out here? The shareholders themselves?

They (vicariously) own the money in the company, and choose how much of it to pay to the executive, because they believe that's the best way to make more money in the long run. Why do you think you know better than them, when they're actually betting money on it?

Or is someone else being hurt here?

Also, as far as I understand it, you're mixing two different things by proposing to "fix" this with an income tax. You said in the paragraph above that executive pay is not good for anyone, which I presumed to be about (or at least to include) the shareholders of the company. But by introducing taxing, you are quite literally talking about taking money from the shareholders and giving it to the government. So at least in this way of doing it, you're quite literally not protecting the shareholders but rather "harming" them. (This doesn't make income taxes bad or anything, I'm just pointing out that one thing they're not good for is to protect shareholdres, IMO).

The idea that shareholders own the company and are therefore good, objective arbiters of CEO pay sounds good on paper but even the simplest of examinations of how this functions in reality should tell you what the problems are.

First, the board who decides the CEO pay are not objective. They are friends with the CEO. They are not objective. The social circles of boards of large companies and the CEOs they hire is not that big, and they do not think objectively about each other.

Second, there's no real motive for them to be strict with the CEO; there's every motive to be overly generous. If they give the CEO ultra generous pay and bonuses, they then expect (and receive) to be treated in the same way when the shoe is on the other foot. When the CEO is on a board for a company they are an executive at.

Executve pay has been on an insane runaway explosion for years. You can say "That's because the companies are so successful!" But Yahoo is evidence success has nothing to do with it.

And I would argue even if it were due to success; the workers should be benefit at least as much as executives, and they don't.

"First, the board who decides the CEO pay are not objective. They are friends with the CEO. They are not objective."

Well you might be right, but aren't hostile takeovers, activist shareholders, etc. disproof of that? In fact, the article mentions that it was activist investors who had Marissa Mayer instated, though I don't really know the history of Yahoo that well.

"Executve pay has been on an insane runaway explosion for years. You can say "That's because the companies are so successful!" But Yahoo is evidence success has nothing to do with it."

It's pretty weak evidence, considering that Yahoo was very succesful for its shareholders. I mean it's one thing to make the argument when the company fails, which I still don't buy. But to make the argument when a company succeeds, by claiming it didn't succeed enough, or that the CEO wasn't enough responsible for the success?! (Defining success as what shareholders care about in this case, which is making money). We can see examples of CEOs who do much worse and destroy lots of value. And I'm not even talking about the fact that they had to pay Marissa Mayer enough to take the risk, or that you can't judge investments solely on whether they succeed or not, since all investments are risks.

But I'm still left with one thing I simply don't understand here - who are you trying to protect that is getting hurt? The shareholders? How are you protecting them by limiting the ways in which they can use their money? If you really think that shareholders aren't well represented and therefore make bad decisions, then maybe you're right, but wouldn't the solution be to fix that problem, instead of attacking a symptom?

"And I would argue even if it were due to success; the workers should be benefit at least as much as executives, and they don't."

Not sure what you mean by "at least as much", but workers do benefit. They tend to hold shares of the company, which have increased in value just as much as the CEO's shares. Salaries in e.g. tech companies are much higher, which is another way in which workers benefit.

Workers in general do not hold shares of companies. It is a small minority of workers in the US who have shares of their company.

The workers are who I'm concerned about, not the board members. The workers suffer from the current trend of executives and boards looking out only for themselves and their fellow large shareholders.

Even when workers do have some shares of their company; I'm sure most Yahoo employees who were laid off would rather still have their jobs than get a final small dividend when Yahoo was sold off.

"Workers in general do not hold shares of companies. It is a small minority of workers in the US who have shares of their company."

Fair enough, I was talking more about tech than about other industries, with which I'm less familiar. Still, a companies success, as you allude to later, is important for employees to keep their jobs.

"The workers suffer from the current trend of executives and boards looking out only for themselves and their fellow large shareholders."

In what way? And why do you specify "large" shareholders?

"I'm sure most Yahoo employees who were laid off would rather still have their jobs than get a final small dividend when Yahoo was sold off."

But you're changing the point of the debate! This option wasn't on the table. Yahoo was failing one way or another. The whole articles' point was that Marissa Mayer tried what she could to turn Yahoo around, but ended up not entirely succeeding on that front. That said, Yahoo overall was a good stock to buy because of other investments.

As other people in the article and in the thread tend to agree with, it's not clear if someone else could've done better. The big question that people have talked about in this thread is whether Marissa Mayer should've received so much money for a growth in Yahoo that purportedly happened without her having anything to do with it.

Btw, I'm just as sure that the shareholders of Yahoo would've been as happy as the employees for Marissa Mayer to have succeeded and breathed new life into Yahoo. Why wouldn't they? Trying to cast this as shareholders vs. employees strikes me as completely wrong.

Sorry, I should have been clearer. I don't want to make this about about MM v Yahoo!. MM is at worst a symptom. My argument is that the disease is systemic.

> In what way? And why do you specify "large" shareholders?

I don't want to go too far into conspiracy theories but I think it is logical that under certain circumstances, a "large" individual shareholder may not have the best interest of ALL the shareholders in mind. Of course, I don't think what I propose will ever exactly happen. This is merely a thought experiment to guide us.

A guiding principle I remember learning in elementary school was that our rights are not absolute. Our right to freedom of speech is not absolute and neither is the right to bear arms. These rights, even though enshrined in our constitution, are arbitrary lines drawn in sand.

I think the right of a corporation to pay and the right of an individual to make a living are also such rights. Now, I don't expect anyone to pick this idea up. It is too toxic. The idea that we should put caps on how much an individual is allowed to earn is unthinkable for most people. People are talking about repealing the estate tax permanently which is a huge blow to my idea.

I hope some day we can push for an aggressive progressive income tax and estate tax. There are a lot of things that need to fall in place for it to happen though. For instance, it should become impossible to transfer large sums of wealth without it showing up on a public ledger of some sort. If someone has not earned $3M+ sum total (including inheritance) over their life and they buy something that costs $3M, that should automatically trip some alarm about back taxes.

The more I think about it the more absurd it begins to sound though. Maybe I was wrong to suggest progressive taxes as a way to enforce caps. If not taxes, what are some ways we can try to rein (is this the proper spelling?) in executive pay?

Hostile takeovers and activist shareholders have been virtually eliminated. Public companies stack their boards and shareholders aren't even allowed to propose different board slates.

Which shareholders exactly, though? Asset managers like vanguard, blackrock and others control a large block of shares in many large companies, and don't really have skin in the game in the same way small investors do.

Blackrock in particular have changed their tune recently, but in 2016 they voted in favour of 99% of all executive pay packages:

http://m.pionline.com/article/20170418/ONLINE/170419868/blac...

> Which shareholders exactly, though? Asset managers like vanguard, blackrock and others control a large block of shares in many large companies, and don't really have skin in the game in the same way small investors do.

If you want to make the argument that investors don't have leverage over Fortune 500 companies, Yahoo is a pretty bad example to argue that case. Yahoo has succumbed more than once to pressure from investors during Mayer's tenure - look at the Alibaba spinoff, for example. (That was halted, but only because the IRS changed the tax treatment, making it no longer financially viable for investors).

As for Vanguard and the like, that's a red herring. Vanguard has as much of a skin in the game as its individual shareholders do. If they don't see a problem with the way a company is operating, then that's pretty much all there is to say. If the operations end up affecting the bottom line, they'll put pressure on the company, put pressure on the board, or they'll divest - and we've seen all three of those happen with Yahoo and many other large companies in recent years.

I don't think vanguard do have skin in the game to the same extent that an individual shareholder does. They care about tracking an index, not micromanaging individual companies

A progressive income tax that caps out at 90% of income above $3M a year? So if you make $3,000,001, you pay 90 cents in taxes on the last dollar you earned sounds fair to me.

Sounds fair to me too. My attitude is that the CEO of a business is homo economicus. Their job is to grab as much value from the company as possible for themselves, just like every other shareholder, employee, supplier, customer, etc. It's none of my business how many billions they take home, but they should be taxed up the wazoo.

> However, my point is that unchecked executive pay is not good for anyone. We don't live in a free market. There ought to be some way to cap pay.

Why? This is not an axiom, it's a conclusion. Defend the premise.

> Why? This is not an axiom, it's a conclusion. Defend the premise.

My basic premise is that shareholders do not have the tools to protect themselves from (to use inciting language) predatory management. Sometimes it looks like it works perfectly. Google seems to be doing just fine with a dual class arrangement and not all shares having the same voice.

We have certain restrictions on freedom all the time. You may not consent to die* for example.

I am not very good at explaining but the idea is that freedom of speech and freedom to carry arms have restrictions imposed on them. Even freedom to privacy is not absolute. I don't know what the legal words mean in practice but from what I've read even habeas corpus has the limitation of "unless when in cases of rebellion or invasion the public safety may require it". The point is that if all these rights are in some way capped, why can't the right to earn money and spend be capped as well?

OK, I haven't answered your question so far. I don't have a good answer with formal proof. I just think an effective income cap is possible within our ethical/moral framework.

* well this one is changing but I guess you could argue that the wording can be you cannot consent to die without adequate safeguards to make sure you know what you are consenting to.

It's funny, but when people talk about CEO compensation, they refer to the value created by the company, yet when they talk about e.g. office cleaner compensation, they talk about the market price of labour.

The salary of a CEO could do with more reference to the cost of the next available substitute, rather than how much the CEO changes the stock price. That would require changes in how CEOs are compensated, but it could also change short-term perspectives. Options would seem to motivate CEOs to think with a longer term, but in fact they align with shareholder interests, which are more often short term with investment decisions reviewed quarterly. And shareholder interests are not the most important reasons why we, as a society, have companies.

"It's funny, but when people talk about CEO compensation, they refer to the value created by the company, yet when they talk about e.g. office cleaner compensation, they talk about the market price of labour."

Inasmuch as we are talking about either of them, the discussion of CEO involves fairly high level abstractions about jobs and tasks that most people have never done at a scale they have never done it at. So I think it makes sense that you have a deeper, more abstract discussion of value.

On the other hand, all of us have cleaned an office/room/building. We've all cleaned toilets and vacuumed floors and washed a kitchen. There's no reason for abstraction or analogy or depth - we all know how it works so we can just cut to the chase.

"The salary of a CEO could do with more reference to the cost of the next available substitute, rather than how much the CEO changes the stock price. That would require changes in how CEOs are compensated [...]"

Would it? I assume that just like in every market, the pay of the CEO is based on exactly this. Supply & demand tend to be the cause of prices.

When we talk about the value that CEOs bring, and quite specifically talk about how no one else could've done the job that Marissa Mayer did, we're implicitly talking about supply & demand - the supply of people who can do the job she did is very small, the amount of companies who would love to have a high-functioning CEO that can raise their stock price is very high, and therefore CEO pay is what it is. I assume that if Yahoo could've gotten some other succesfull figure at a fracftion of the price, they would've done so - it's in the shareholder's interests and they more-or-less make the decisions.

Of course, I'm not naive enough to think that this is a purely technical matter - I assume a lot of human psychology, precedent and culture goes into this, e.g. the amount that exectuvies make is well-known, which causes other executives to raise their price to "compete", etc. This effectively makes wages higher than they "should have been". But I do assume that none of us are smart or knoweldgeable enough to say what CEO pay really "should" be, even assuming that's a well-defined concept. I think that most people just hear a big number, say "that's way too much" and have this as the bottom-line of their thinking, then come up with all sorts of arguments for why their bottom line is right, rather than questioning the core assumption and realising that maybe, CEOs are worth their price.

Something that is often left out from these articles is the $230 million acquisition of Polyvore in 2015 [0]. I still don't know the reasoning behind this decision other than the existence of prior relationships with people that worked at Polyvore. From casually browsing the Yahoo Style vertical, I don't see any connection to Polyvore's site and vice-versa.

[0] http://www.businessinsider.com/eric-jackson-slams-yahoo-for-...

IMHO the activist shareholders were the key decision makers in this story. The key I believe was the following.

"The surging value of those investments [Alibaba and Yahoo Japan] — not any brilliant business moves by Ms. Mayer — is why Yahoo’s shares went up....managing those investments was a key reason that Yahoo’s board hired Ms. Mayer...Ms. Mayer delegated the Alibaba issue, hiring an experienced dealmaker, Jacqueline Reses, to be the company’s principal liaison to Alibaba and its leaders, Jack Ma and Joseph Tsai. Ms. Reses helped the Chinese company navigate its initial public offering. She also renegotiated an agreement, struck just before Ms. Mayer arrived, that would have forced Yahoo to sell an additional 122 million shares in the offering. Those extra shares are now worth $15 billion."

Those two acts---knowing how to find Reses, and knowing how to delegate to Reses---combined with finding a buyer, were what made Mayer's compensation palatable to those activist shareholders. Those shareholders considered Mayer an enablement platform like a smartphone app store, and for the value "unlocked" enabling the shareholders to cash out, they were willing to pay the enablement fee. For a fee far lower than 30% of what they unlocked, they probably considered it well worth paying.

That unlocking the value meant effectively dismantling Yahoo was incidental for the decision makers.

I think the moral of the story for me personally is if I ever find myself within a company where activist shareholders successfully get on the BOD to "increase shareholder value" in any manner that smells of selling off all or the most profitable/highly-valued parts of the company, then I will send out my resume (always maintained and updated) and update my availability status.

I'd like to hear contrary viewpoints, though.

"Arguably, Yahoo was unfixable. The company’s DNA and technology were built around its original identity as a web portal"

I have a theory that there's always at least one big web portal - AOL started as a dial-up ISP and turned into a portal. Yahoo started as a search engine and turned into a portal. Facebook started as a social network and turned into a portal.

As far as I remember, Yahoo was a portal first and foremost, it didn't start with a search engine. The quick googling I just did seems to confirm that, it started as a human curated directory and didn't start crawling till 2002 (and almost bought Google at that point).

It makes me feel old when people talk about doing historical research on events that I lived through.

When yahoo first started out (and at that time I was using it) the role it played was equivalent to that which search engines play today. At that point in time there were no search engines, the only way to know about a website was to already have the address, or two read someplace that referenced or linked to it. Yahoo was initially "just a list of websites" but the role it played was very much the role that Google plays for so many people today: the site you start out on, and the place you go if you want to find something on the Internet.

They eventually lost that role to search engines like Alta Vista, and later incarnations of Yahoo became a"Portal": a site you go to because it has decent implementations of many different features such as news, movie listings, stock quotes, and everything else that Yahoo offers.

"Yahoo was initially "just a list of websites" but the role it played was very much the role that Google plays for so many people today"

More specifically - you went there and could "search" the directory. You put in a word or phrase and it searched the directory listings to find matches. It was just only searching its own very limited set of info, vs a crawled index of all the content of the sites. IIRC, they'd also started charging ($250 IIRC?) for adding a listing to their directory sometime in the late 90s or so.

https://en.wikipedia.org/wiki/Yahoo!_Directory says $299 per year; also this page says that it just went away in 2014.

Interesting ... I remember only trying it as a search engine alongside AltaVista and a couple others. I guess I never realized it was human-curated. I didn't (and still don't) use portal sites - I use pinboard for bookmarks and have my on-line life organized through links and tags.

I was commenting to someone the other day that I still have friends with AOL email addresses. In the BBS days, that was how those without Internet access could communicate with those that were "surfin' the net".

Your comment reminds me of this:

https://www.theguardian.com/technology/2015/dec/12/ratio-tec...

Is it the nature of network effects that drives this somewhat characteristic industry dynamic?

the correct name is Audience Monopoly. Which so far have been relatively transient.

"I have a theory that there's always at least one big web portal - AOL started as a dial-up ISP and turned into a portal. Yahoo started as a search engine and turned into a portal. Facebook started as a social network and turned into a portal."

It goes deeper than that ... the trend is not to become a portal but rather, to become "the phone company".

Everyone is trying to become "the phone company" in which they attain a central, monopoly position through which all communication takes place.

Google and Facebook are currently fighting for that spot. They're trying to become AOL, but more deeply, like AOL before them, they're all just trying to become ma bell.

This is very convincingly explained in the very highly regarded book _The Master Switch_, by Tim Wu.

What is going on here? She was given a salary that made her preposterously rich no matter what she does, an unlimited checkbook to buy and do whatever she feels right, control over a huge enterprise with plenty of talent and capabilities in place.. and the best of all, two magic money making boxes that take no effort whatsoever but basically guarantee there is zero short term pressure from shareholders.

And here we are joining a mad apologist chorus of "oh, but nobody could have done differently". That is crazy. If you believe that, you might as well stay in bed for the next month because apparently whatever happens has been predetermined a long long time ago.

Thank you!

I think one thing that's important to keep in mind is that some part of that compensation is for effectively jettisoning her career.

Proportional/justifiable? I don't know. But now she's the woman that drove Yahoo! into the ground - that'll forever be her "thing", regardless of what role she played vs. unavoidable reality of sinking ship. That can have the effect of depressing compensation elsewhere, even if it certainly doesn't stop her getting another executive role (as we all know).

If you're going to pay someone to be the captain of a cruise liner that has an 80% chance of sinking on its next voyage (even if it's not like the Titanic where everyone dies), that's going to take some money, too. He won't be piloting cruise ships for a while.

There's probably a niche for riding big, but tainted companies into either an exit or some cultural, product, or whatever pivot.

For example, I could see MM being pitched as a replacement for Kalanick if Uber's board had any teeth.

compensation is for effectively jettisoning her career

It doesn't work like that. Take Carly Fiorina for example. Measured either by jobs or by shareholder value destroyed, she has a fair shot at the title of "worst CEO in history, ever". And yet people still thought that that experience qualified her for a shot at the Presidency. Indeed she even claimed that her business experience was what made her the best candidate! MM will probably be Uber's next CEO without missing a beat.

Yeah, I know, and I was mindful of that in trotting out the hypothesis. But I suspect there is a taxonomy within the upper strata of the CxO world where the optics of "running Yahoo into the ground" may disqualify her from the crème de la crème CEO jobs or pay packages, forcing her to settle for merely $ungodly_sum with not so hefty a multiplier.

They're also rules that most likely apply only when making lateral moves within the field, subject to the highly idiosyncratic rules of the Fortune 100 exec recruitment game. The headers get stripped when you move into something like the Presidency, since there is an alchemy by which you can parlay a previous stint as a Fortune 100 executive into the vague catch-all digest of "business experience". I mean, look at our current President.

"Yet most of Ms. Mayer’s paycheck ultimately came from the gains in Yahoo’s Alibaba and Yahoo Japan investments, over which she had little control. Thanks to an investment made in 2005, Yahoo had a 24 percent stake in Alibaba, which today is China’s leading e-commerce company."

Quite literally money for nothing, and people wonder why CEO pay is such an issue.

Ah, but look at her pedigree and previous accomplishments! Like some kind of orbit-injection-burn. She had to be at just the right place, at just the right time, with the correct velocity.

Some days I'm jealous of these execs. Other times I realize that I was playing computer games or reading esoteric subjects instead of excelling at jumping through every hoop placed in front of me.

From reading this (and following this vaguely), I took the following assertions:

i) MM had virtually nothing to do with tripling of stock value, that was due to ownership in Alibaba/Yahoo Japan

ii) She did not turn Yahoo around as a business and made failed acquisitions.

Yet, the article wants me to believe

iii) Nobody could have done any better in this position. She achieved the best possible outcome

If her net contribution to Yahoo as a business was 0, it seems pretty unreasonable to assert that NOBODY could have made any better acquisitions (e.g. buy Instagram, not tumble), or strategic initiatives (why focus on search?).

I actually agree with the article that nobody could have done better, but they certainly could have done the same as MM for a whole lot less salary.

You didn't address OP's point:

>If her net contribution to Yahoo as a business was 0, it seems pretty unreasonably to assert that NOBODY could have made any better acquisitions (e.g. buy Instagram, not tumbler), or strategic initiatives (why focus on search?).

I don't think on average anyone else would have made better acquisitions. Sure in hindsight we can say other acquisitions would have been better, but I don't think anyone else hireable would have done better than MM other than through chance.

Having said this I think Zuckerberg is massively undervalued as a CEO.

I can't answer for anyone else but I can say with pretty good confidence that Yahoo! would not exist today if they put me in charge. I would fling poop left and right the moment I discovered the back door. I wouldn't have gave two poops about shareholder value. I am sure "they" would have found something sketchy about my past life that is worthy of at least ten life sentences and I would be sent away for good.

I was already a little skeptical by the time Y! bought tumblr but I think the effort was there. I saw bringing in Katie Couric and David Pogue as a way to ease older people to watching "live TV" on Y!. I still don't think there was any fault with the vision. It might just be that the execution was a few years too early or bit too ambitious? I mean getting younger audiences to watch the news is not easy and getting majority of the "old" people to go from lean back to lean forward isn't easy either. It feels like a gamble and I still believe it succeeded in a parallel universe.

>I would fling poop left and right

Username checks out :)

I will raise my hand to say I, for one, would have been glad to perform the job of “Fail to turn Yahoo around” for a mere $1MM. Yahoo shareholders sure got ripped off!

I always grin when I read articles where she talks about her work ethic and 12-14 hour work days. Whether she ultimately did anything, it does not matter. Most likely she added very little operational value.

She was paid well, but ultimately, was put in place by activist investors to sell off the thing and not rock the boat too much.

Nobody could have done any better in this position. She achieved the best possible outcome

Her plan was to bring back the glory days, back in the first internet land rush in the nineties, when Yahoo was one of the true giants of the Valley. She wanted to put it back where it had been, on par with Google and Amazon. But it didn't work. Could it have worked? Hard to say. I doubt anyone really knows. But it didn't.

I don't think she deserves a lot of credit for that. For tens of millions of dollars a year we should expect success, damn it, not a valiant effort.

The alternative would have been consolidation. Shut down all the stuff that's losing money. Sell off everything that is working but doesn't really fit. Focus on the stuff that's working, like Yahoo finance and sports reporting. The result would have been a coherent media company that could make real money. But it would have been a distant shadow of what Yahoo once was.

random leech comment

she promotes women as leaders, props for that

damn $900K a week... what does one do with such income hahaha cries

edit: damn I take it back, I was thinking of Facebook's COO sorry

Firstly (and maybe flippantly?), net contribution of 0 is not necessarily bad - you're forgetting that a lot of CEOs could've destroyed value. E.g. arguably a few of Uber's actions have destroyed value, tons of companies effectively close, etc.

Secondly, I think net contribution of 0 isn't really accurate - there were a lot of actions that were taken to get more money out of the Alibaba shares, e.g. ways to mitigate the tax burden, and as alluded to by someone else in the thread (and in the article), finding an executive that helped undo (?) a deal that would've forced Yahoo to sell more Alibaba shares.

Lastly, even if all of the above is true, CEOs in large part take strategic bets. It's easy to look back and say that all the bets failed, but that doesn't make taking them the wrong move.

"Arguably, Yahoo was unfixable."

I really don't think so. Their product would have succeeded with a more humble and focused approach.

A generalist company like IAC/InterActiveCorp is doing fine: Yahoo too had all the assets to keep a position of relevance on the global internet.

Yahoo management was bad. That's all.

Can you tell me what exactly is their product?

Eyeballs.

which are all moving to whatsapp and wechat.

yahoo could have retained some of those eyeballs if they had more than two developers working on IM. To list a single example that a toddler could have came up with. saying that nobody could have done better than MM is a huge stretch of imagination.

I agree. I'm not one of he people who think that no one could have done better than MM. On the contrary, my cat could have done better. My cat would have also chased a laser pointer around the room instead of pissing a billion dollars away on tumblr. Then he would have insisted that yahoo offset the capex on internal clusters by entering the cloud infrastructure field. This would offer another revenue stream not tied to eyeballs.

Newspapers had been consolidating since they didn't know how to make money from the web. So I expect chairman meow to have also bought some papers. Cats love sitting on paper. And getting yahoos ability to make money from the web and the natural draw of journalism it seems like a good fit.

Well she did buy. but instead of buying newspapers and getting the entire newsroom she bought a couple of high profile bubble heads who millennial don't even know the name.

One of which spent all her time making and promoting her political documentaries.

IAC's market cap is about $8B. Yahoo's cap is 6x that at $48B.

It's hard to imagine Yahoo just transforming itself into the same kind of company as IAC, only 6 times bigger. But it could be said that it is making that kind of transformation, only more suited to its circumstances, by selling off its consumer brands to Verizon and retaining just the more valuable Asian investments in its current entity.

The whole problem for Mayer was that its key products had started losing relevance long before she joined, and its brand/reputation was already a joke among the types of people it needed to appeal to - i.e. early adopter consumers and top engineering/design talent - if it was going to make a turnaround.

Unlike Apple in 1996, it didn't still have loyal, true-believer devotees ready to enthusiastically embrace it once it started producing good products again. The people still using Yahoo products have mostly been people too indifferent about tech to switch their email platform or their browser's default page - i.e., people at the opposite end of the spectrum to Apple's true believers.

So all she could do was carve up the assets and distribute them in a way that is most lucrative, which is precisely what she's done.

> all she could do was carve up the assets and distribute them in a way that is most lucrative

That doesn't explain the dozens of acquisitions under her leadership.

Sure it does: it may have been the only way to attract and retain enough top engineering and design talent to keep the consumer brands valuable enough to sell at a good price.

Xobni, in particular, would fit that justification, given how key email has been to Yahoo's user retention.

Tumblr on the other hand was more of a product/brand/audience acquisition than an acquihire, but it could well have made the suite of consumer brands more attractive to buyers.

So she got paid preposterous amounts of money to ruin other businesses so she could use their workforce to fool investors in to propping up Yahoo when it was noticed Yahoo was no longer useful and was falling in it's goals?

Capitalism: 'optimising' markets by giving all the value created to individuals who destroy the means of value creation.

It's like some sort of economic terrorism, destroy any hope of economy and flee with the money.

Now that you've named it, this looks way too common.

> IAC's market cap is about 8B. Yahoo's cap is 6x that at 48B.

I don't think this is a fair comparison based only on those two numbers. IAC has spun off a lot of companies.

For internet related stuff, it has spun off: - Expedia in the mid 00s which at the time consisted of Expedia, Hotels, Hotwire, and a few other properties. Currently $23B market cap. - TripAdvisor was a part of the Expedia spin off and later got spun off itself. $5.5B market cap. - LendingTree was spun off - $2B market cap. - Interval Interactive spun off for a few billion market cap too. Not sure what's happening with them now. - Match Group was just spun off last year or so, $5B market cap.

Maybe a few other small things too, not sure.

All of the above companies are also profitable last I knew. I guess it also is a bit unfair to include all of those without the context that many weren't built from the ground up, but acquired initially. And you can't just combine the market caps of spun off companies into one number to compare to Yahoo. But still.

After five years of leadership the bottom line is value of investment to shareholders has tripled. Mission accomplished. Who cared about Yahoo web business even then anyway.

Nothing to do with reversion to the mean then?

Reversion to the mean still takes work.

The article's point is that virtually all of this tripling was due to Alibaba and Yahoo Japan, not anything she did.

I don't know, it mentions that she had "little control" over the investments, but then goes on to explain that:

   managing those investments was a key reason that Yahoo’s board hired Ms. Mayer. Mr. Loeb had accused Yahoo’s previous leaders of mishandling both their core business and the Alibaba relationship.... Ms. Mayer delegated the Alibaba issue, hiring an experienced dealmaker, Jacqueline Reses, to be the company’s principal liaison to Alibaba and its leaders, Jack Ma and Joseph Tsai. Ms. Reses helped the Chinese company navigate its initial public offering. She also renegotiated an agreement, struck just before Ms. Mayer arrived, that would have forced Yahoo to sell an additional 122 million shares in the offering. Those extra shares are now worth $15 billion.

Yeah but those stocks were going up regardless. I thought the only point in Yahoo existing for the past few years was trying to figure out some way to avoid tax on selling the alibaba/yahoo japan stake. Yahoo critically failed at that and when it did it got sold soon after. Not sure if this all looks good for Mayer as a good value creating leader.

Any article that claims to be "dissecting" her compensation and then doesn't detail her prices for her option grants and how much she made from each specifically and how much she made from her restricted stock, isn't "dissecting" squat.

In reality she got options for a bunch of shares. The stock tripled, making her hundreds of millions of dollars. If the stock had gone down or just not gone up, she would have made far far less (basically just salary plus value of the restricted stock grant).

Whether she deserves credit for that, or whether option grants are even a good mechanism for rewarding CEOs, is an entirely different conversation (answers are she deserves some credit and no). But she was never paid $900K a week. As of today she can make $900K a week if she sold all her shares right now. But until she cashes out her shares that amount changes daily. Next week her estimated earnings could easily be down to $700K a week, a year from now they could be nearly wiped out.

"Dissecting" option grant valuations in detail would also have been interesting. For example her original option grant was valued at $21M. That means that based over the length of the grant, with a reasonable expected stock price increase (say 8% per year), compensation consultants estimated that she'd profit $21M. So how many shares, at what price, add up to that valuation? Why was that reasonable?

I understand she walked away from a huge amount of compensation she was owed at Google to take the Yahoo job, and the board had to compensate her for that. But how much of that was reasonable? "Dissection" of it by a journalist should include details of that compensation, how the amount was determined, and quotes from those who had opposing viewpoints at the time.

900k/week? That is 46M$ for a year. That is 500 times more than a salary considered pretty decent in the UK tech world.

No matter who you are, what you do, that is just plain too much money to receive as a paycheck.

It is not if you own the company. It is certainly too much if you are an employee.

That is what I meant, yes.

If you own the company and/or properties, and get 900k per week out of it, you're family either have a lucky (or rather bloody) history or you're incredibly smart.

That's not even the highest, either. Pichai makes more than double.

Out of curiosity, what is the known highest salary for a tech-type employee? (dev, sysadmin sre, whatever) You know, those whom without tech companies tend to sink.

~350K / year afaihdp.

Consultants can and do make (much) more on a weekly or monthly basis but they rarely have their dance cards fully booked, so then you have to discount the weekly rate by how much down time there is.

What about Anthony Levandowski? He worked for Google for about 10 years, and got $120M.

How many tech people are getting hefty "incentive payments" which we don't even know about, since they don't end up getting sued?

Those are the exceptions, not the rule.

There's only one CEO per company.

If you read carefully she got a lot of compensation as stock. It's the stock price that shot up due to alibaba and yahoo Japan that netted her money. Initial compensation was only 30 mil or so.

Same with picchai. Google is doing very well under him. Stock rises and his gains rises. He is very incentivized to make that happen as the CEO

> No matter who you are, what you do, that is just plain too much money to receive as a paycheck.

Why? Because you say so? This is dangerous thinking.

Because this is too much of a difference, and these usually lead to happenings like 1793 France. It's not my saying, it's what history is indicating.

The French revolution? That really doesn't apply here.

You can't just compare 1 salary against another - this job comes with responsibility for thousands of employees with large risk and control factors which are mirrored in the pay. It's also not done in isolation as the shareholders and board have to agree that this is a valid amount.

> You can't just compare 1 salary against another

Yes, you can.

and that gets us nowhere beyond simplistic sensationalism.

Risk? Come on. CEO loses their job and maybe they have to downsize to a million dollar home if they've been managing their money right.

Rank and file employee loses their job and suddenly they have no health insurance and are struggling to make rent.

Who's really running more risk?

That's not related to this at all. Anyone can lose their job and obviously having more money makes it easier to deal with.

This job (which has nothing to do with the person who inhabits the position) pays so much because comes with risk and responsibility to make sure the company earns value while protecting the livelihoods of all those other employees. The amount offered is what the market and the board has determined it takes to fill that position.

Many people do not want to and would not be able to run a company of this magnitude with the pressures involved.

Can you be specific about what you mean by risk though? Because I think it's clear that you're not talking about personal risk.

The French didn't rise up and decapitate their royal family because some people in France were very rich; they decapitated the aristocracy for taxing them to starving point and spending it on their own luxury rather than on anything useful for the people. High-paid CEOs like Marissa Meyer aren't harming or stealing from Joe Public, the only people they're potentially hurting is shareholders (and maybe employees if they destroy the company). I myself can't think of any point in history where people rose up in revolution and overthrew the government just because "some people here are very rich".

Company with $50B market cap is searching for a new CEO. There are two candidates. A is asking $50 million per year, B is asking $25 million per year. How much more should A increase ROI% to justify his/her higher paycheck?

There are always about 7 billion candidates. That we narrow the focus to people who are only willing to do the job for 25 million might be the start of your problem.

Company with $50B market cap is searching for a new CEO. There are two candidates. A is asking $50 million per year, B is asking $50K per year. How much more should A increase ROI% compared to B to justify his/her higher paycheck?

I don't think focusing on Mayer is helpful. It is one of the more egregious cases but it shows just how badly c-level compensation, accountability and agency is broken.

It also shows how some economic theories that sound good don't remotely work in the real world. And sometimes economic theories are designed to sound good.

There are real world consequences of skyrocketing executive pay disconnected from performance and accountability. Bad or short term strategies can result in losses of thousands of qualified and experienced people, plummeting productivity and revenue, mid and long term setbacks and serious harm to future prospects. Golden parachutes usually mean no consequence to the implementing c-level teams. They usually end up easily soft landing at a consultancy or another gig.

Carly Fiorina and Stephen Elop come to mind. Robert Nardelli and Home Depot also come to mind. You can't be hand waving around this for 2 decades counting.

They could have payed roughly 500 people for 5 years with that money. Maybe one of them would have caught the bugs that led to their data breaches.

They also could have bankrolled 10 or more start-ups with that cash.

Hell, they could have spent it on blow for their workforce. At least that would have made for interesting stories.

Or ~100 highly qualified principal engineers.

PG and company managed to bankroll 100's of startups with that kind of cash. And probably much less, considering that that was the whole take of the sale of Viaweb and I'm sure they didn't invest all they made with that sale into YC.

I know right, I can't understand how we still place so much importance on the character sitting in the CEO's chair and not the people actually working on the products.

I suppose not all companies do that. It's sad about Yahoo, my first email address was Yahoo, signed up around 1998. I still have it and use it.

The scale is ridiculous. What she made in a month is probably more than what my parents will make during their lifetimes.

She's made more money in a week that twice what I've made in all my life.

Sounds like she and her friends she hired were some kind of locust who got lucky in the end.

Sounds more like she joined a sinking ship and it sank.

They sold it for a fortune before it sank.

I guess so. I'd expect no different from any other CEO.

Normal rules don't seem to apply in Silicon Valley.

Yahoo is dying, let's put Marissa at Yahoo to avoid being seen as a monopoly.

why does it need to be even a question whether she was overpaid. these ceos always are. in this case even more, because they paid for a big name. names dont produce results, but they cost a lot of money all the same.

I know this is going to sound bitter but I could have trained a monkey to do her job. And I would have asked for only 50% of her salary.

I'm sure she thinks she did a great job and earned her position etc. By realistically I think her best assets are like any other professional CEO' s. Good at bullshitting and at golf and knowing the right ppl.

What really frustrates me is how nothing ever sticks to these guys. Lose or fail it's never their fault and they always earn their money's and bonuses.

>I know this is going to sound bitter but I could have trained a monkey to do her job..

You could have. But you could never have made the monkey make it to the interview...

> you could never have made the monkey make it to the interview

You phrased that correctly. The hard part wasn't to do a good job in the interview, the hard part was getting invited to the interview in the first place. And to be fair, Melissa Myers' resume justified her being considered for the position.

Is it really hard to believe that MM knew about the Alibaba stake, calculated that Yahoo was beyond saving, waited some time and cashed out?

Is it possible that the Loeb told her this and they made a deal?

He needs a star performer and she probably has met a dead end in Google.

It's a win-win for them, not so much for Yahoo employees.

Hyperbole much? I understand your sentiment, but look at the stellar career that led her to this opportunity.

Summary: Mayer earned $240 million for pushing Yahoo further into decline, while a Yahoo investment that predated her skyrocketed, tripling Yahoo's stock price during her tenure (despite her destructive impact).

earned =/= was paid, IMO this is an important distinction.

the salary is absurd for any outcome. anyone getting paid that much is irresponsible, as is anyone paying then.

Sure its absurd, but at least the Feds & state of California are going to get a rather large chunk of it.

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