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Comment by btipling | Hacker News Reader

$100 million dollars? Really? How could that be cost effective?

Agree the amount seems obscene. But technically as long as they believe, at the end of that period, that Yahoo has done say $150M better, for example, then on the net Yahoo was better off. I doubt that Ms. Meyer (and indeed, probably most CEO's) are really worth what they get paid, but I do think it's possible that here coming on board may have a big enough impact, both directly and indirectly, to move the needle for them by $100M+ net relative to alternate courses of action. And that's all that's needed for the math to justify it. One question will be, of course, whether if by her coming over it also leads to other Google caliber folks switching ships as well. I've heard people say she's a great choice, and people say bad, but I can't add anything either way. It's likely that she was one factor in Google's success. It's also likely that some people give her too much credit and she got a little lucky. Both can be true.

Because that has worked out so well for them so far, they are great at picking CEO's.

Do you think it's even possible to say that those gains, if they occur, are a direct result of the CEO's actions? Is it even /possible/ for Marissa to provide /that much/ value to the company? I feel as though the collective actions of everyone other than the CEO have a much greater impact on the company's success in a given year.

In your car, when you push the gas pedal and turn the wheel, you are not moving the car. You are directing the car how and where to move. Lately, Yahoo has been ramming into the back end of a slow moving bus.

If she gets Yahoo back onto the expressway, she will be responsible for the success, although all the employees working together will be implementing the success.

Your analogy makes all other employees look like mind less cogs,who can have no idea's of their own.No CEO can succeed without a good team. Which begs the question , if yahoo makes 150M more, does she deserve 2/3rd's of that new money? Is Marissa the only person who has a winning perspective or a sense of direction in a firm of more than 10000 people? What we see here is the trickle down effect and people closer to the money paying themselves first. It is also true that a bad ceo ( thompson, bartz) can do more damage to a large company like yahoo than the benefits a good ceo can bring. The board has swung for the fences cause it has shot itself in the foot many times. A lot of this money , is for Marissa to NOT screw up yahoo like her predecessors. Even if she just keeps the engine chugging along at an average pace, the board will be relieved. edit: Grammar

Somehow I think that if the ordinary employees weren't told they'd be fired for doing what they think is right instead of what their bosses order them to do, they could run things just fine themselves. Only the rulers think you need rulers.

Consider that without some big changes, Yahoo's value in five years may well be zero.

I'm always surprised at this sort of feeling. The collective actions of everyone else at the company, if the company is not run pathologically, exist solely to pursue the goals of the CEO. The CEO sets the goals: describes what it is that this group of people does, what value they offer to the world at large.

You may not like that that's the way it works, but I think it's impossible for the CEO to fail to have a huge impact unless the company's run terribly. I also think it should be trivial to see that, given that the CEO has such a huge impact on the direction the output of this large number of employees takes, that the CEO's actions have an enormous impact on the value the company provides, and consequently the profit the company derives.

If the CEO of Yahoo decided that their best move was to pursue 1990s era AltaVista style search, combined with the idea of 'being a homepage' (which afaict is their current strategy, plus destroying good products), I think it'd be hard for you to NOT recognize that they would be destroying value in the company at a much higher rate than $150M/year. The CEO, personally, would have that impact. If the employees were more efficient at their jobs, or less efficient, it would have little impact (rounding error) in the overall impact of this policy pursuit.

CEOs are the company, for many purposes. Why shouldn't they be paid accordingly?

What if all the great ideas in a company are coming from the non-CEOs? If these ideas are instrumental in the company's success, then wouldn't the CEO be receiving wildly disproportionate credit for said success? (Regardless of the fact that the CEO is the one who allows the ideas to come to pass, the fact remains that the people with the ideas/talent are the ones providing the real value.)

I think that your point is legitimate but that you overvalue the value of it. Yes, in that hypothetical situation, the CEO would be receiving disproportionate credit for the success. I even think this might happen quite a bit. But things don't happen in a vacuum. I think that Meego was a fantastic product, the N9 a brilliant piece of hardware, and I think that no matter how much that's true Stephen Elop truly and royally ruined any value Nokia had a chance of creating by pulling a helluvan "Osborne Computer." The ideas and talent were all there in spades, and the execution by the guy responsible for handling the organization's execution COMPLETELY trumped all of that.

Ergo, CEOs actually do have quite a bit of value.

if the company is not run pathologically, exist solely to pursue the goals of the CEO.

Only the CEOs and their hangers-on actually believe that.

'Net relative to other course of action' is the tricky bit. I find it hard to believe that investing in 15 people at $15 million, or 150 at a million, or however you want to break it out, would not be a better alternative. The issue of CEO pay boils down to how skewed you view the distribution of talent among a population and how much a single person makes a difference in an organization. Personally I think success is more of a function of collective or distributed intelligence, and perhaps if a single person is so pivotal compared to nearly everyone else in an organization that is more of a reflection of poor organizational structure that is not distributing responsibility and power sensibly. At the very least that sort of corporate structure could hardly be viewed as a robust system. Thats not criticize this particular case, but highly skewed compensation in general.

Yahoo's yearly revenue is around $4 billion. Net income around $1 billion. It's not unreasonable to expect she could raise revenue and/or improve the profit margin by a few percent points.

Anything above a 5% jump in Yahoo!'s stock price during Mayer's tenure would equate to $1billion increase in Yahoo!'s market cap.

One way to answer your question, would be to say: It seems the shareholders of Yahoo! are willing to pay a fair commission to someone in exchange for an increase in the value of their stock (with optimism that Mayer's leadership will result directly in this happening).

It's kind of b/s though to assume that just because a company does better it's all due to the CEO.

Anything above a 5% jump in Yahoo!'s stock price during Mayer's tenure would equate to $1billion increase in Yahoo!'s market cap.

But that's not actually value generated. It's value captured from the grand casino of the stock markets. Yahoo! itself is not holding 1 billion more dollars at the end; Yahoo! shareholders are collectively, all tens of thousands of them, holding 1 billion in potential gains should they all sell their stock in some way that won't crash the stock price from the sudden sell-off.

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