5 ms·

"Ms. Mayer called a meeting with senior executives in August and asked them to sign a written agreement to stay with the company for at least three more years,

by steve19 11y ago

"Ms. Mayer called a meeting with senior executives in August and asked them to sign a written agreement to stay with the company for at least three more years, according to two people familiar with the meeting." Is such an agreement enforceable? Or is this some meaningless pledge? If you want people to stay, give them a decent financial incentive.

jakejake 11y ago
You'd assume that if a CEO were asking you to sign such an agreement, they would offer some sort of incentive in return. Otherwise it seems more like an ultimatum for you to declare your loyalty.
- TylerE 11y ago
  Actually, contractually that gets really interesting. Basically, for a contract to be valid both sides have to give something, this is referred to as "consideration". Now, normally, with work-related contracts the consideration is "continuing to employ you", but with senior mgmt (golden parachutes, stock options, etc) I bet the waters are murky.
  - cstejerean 11y ago
    From what I recall "continuing to employ you" is not legally acceptable consideration, because you had the job before the contract, and therefore you are not getting anything new. If it involves a pay raise, promotion, a bonus, etc, then it can be acceptable. IANAL.
    - kylec 11y ago
      Continued employment is sufficient consideration for some contracts http://www.jacksonlewis.com/publication/continued-employment-adequate-consideration-non-compete-imposed-mid-employment-hawaii-judge-rules http://www.jacksonlewis.com/publication/continued-employment.... However, I can't imagine that if Yahoo was so desperate to retain its executives that it would fire them if they didn't sign the agreement. I'm guessing that there was some additional incentive offered.
AndrewKemendo 11y ago
Probably not. If you want people to stay, give them a decent financial incentive. I keep seeing this sentiment, but I think it's important to distinguish between "don't give your people worthless equity instead of a good salary" and "I'm just here for the money." Starting to see a lot of the latter around here and it's disheartening. Sure, broken dreams and failed visions and all of that happens, but it's part of the process when you try to do "big" things. Widespread cynicism will kill high-tech.
- obrero 11y ago
  > "I'm just here for the money"...it's disheartening Yaa, how awful...because my landlord accepts a share of my company CEO's "vision", as does my grocer > Widespread cynicism will kill high-tech What a laugh that the heirs, the LP's, the VC's and seeds and angels aren't the cynics, your unhappiness is the twenty-something wage slaves slaving away at all hours building products are now disheartening, because they're buying the BS less and want to keep more of the wealth they're creating. The heirs and LP's are not "here" for the money. They're in their yachts at Key West, and they have their bets spread. Woe is us, how disheartening that the people creating the wealth want to keep more of the wealth they create, as opposed to believing the fairy tales the idle class and their myrmidions are telling them.
  - AndrewKemendo 11y ago
    You're fighting a strawman my friend. I explicitly stated that I was not talking about inequitable distribution of capital in a podunk startup. Indeed, in the context of this, the executives that Mayer would be seeking to incentivize with cash are already in the upper stratosphere of ownership - so given that as a background my slant should have been clear.
    - harryjo 11y ago
      Those people, including Mayer herself, are in it for the money and the power/glamour/fame. Look at Mayer -- a Google bigshot who has power over thousands of people at Google, who left because she felt overshadowed by the CEO. She went to Yahoo not because she wanted to do more/bigger/better things -- she could do anything she wanted at Google! -- but because she wanted to be CEO of something.
nostromo 11y ago
I'm sure there was some sort of bonus involved. They're called retention bonuses. Similar to signing bonuses, you can be contractually obligated to pay them back if you don't stay for the term of the contract. Most companies will keep retention bonuses very hush-hush.
- iofj 11y ago
  Aren't retention bonuses in terms of cash you have to pay back if you quit illegal ? (Note: cash paid if you're still there after a period is very much legal)
  - jfb 11y ago
    It would be structured as a loan.
smt88 11y ago
It's not enforceable. In the US, you can't enforce an employment contract if it involves forcing someone to work for you. This was partially legislated as a legal defense against indentured servitude.
- rhino369 11y ago
  You can't get "specific performance," where the court physically forces you to uphold the agreement. But it is enforceable in that Yahoo could sue for damages. The damages probably wouldn't be all that high though. It is more of an issue when the employment is something unique. Like a start athlete or movie star. You can't just find another person to play Tony Stark in Iron Man 4. But there are plenty of people who can be a Yahoo executive, relatively speaking.
  - sjg007 11y ago
    But Batman gets replaced all the time... The only thing that would give leverage would be a clawback provision on the retention bonus and/or vesting.
- pkaye 11y ago
  What about retention bonuses?
  - smt88 11y ago
    You can certainly be forced to pay back a bonus you received by agreeing to work for the company for a certain amount of time. All I'm saying is that a court can't make you work for any company, even if you sign a super-official-sounding document saying "I'll work for this company for ___ years".
- jedberg 11y ago
  > In the US, you can't enforce an employment contract if it involves forcing someone to work for you. Well kind of. Technically you can't force them to work, but you can force them to pay someone else to work in their place. Most teachers have this kind of contract. They are not at will employees. They can't be fired during the school year and they can't leave either. If they don't show up to work, they have to pay the school back for the part of their contract they did not fulfill to pay for the substitute teacher. (This has nothing to do with tenure, BTW, it's true for tenured and untenured teachers alike).
paulsutter 11y ago
Driven people want purpose and to be part of a team thats making an impact. It's toxic to demand written agreement to stay. The request itself says "Things are so bad that nobody wants to be here. Maybe if we all sign this paper, then at least we're all in the same boat". (Side note: money is among the least effective incentive. Waiting for a large incentive payout just makes the time more miserable.)
- JabavuAdams 11y ago
  Yeah, desperation is not enticing.
hueving 11y ago
A standard vesting schedule is basically what is described there. An agreement to stay with the company and if you break it, you don't get your options/stock.
twblalock 11y ago
I would imagine that recruiting is harder for Yahoo than retention. It must be very difficult for them to attract good people, at all levels of the organization.
shostack 11y ago
Talk about a gun to your head. If they don't, I can only assume they are short-listed under the "Not Loyal" column. Definitely curious about what sort of carrot/stick might be attached to such an agreement to make it even worth attempting that tactic.
melted 11y ago
_If you want people to stay, give them a decent financial incentive._ Nah. That doesn't work (assuming you're already paying well). Best people will consider this a sign of desperation and leave, and bottom of the barrel will stick around for stuff to vest. Fail/fail.
plinkplonk 11y ago
If you turn this idea around and employees (especially engineers) insisted that companies guaranteed employment for three years and give it in writing, there would be gasps of horror. Marissa must be truly desperate.

by steve19 11y ago

jakejake 11y ago

You'd assume that if a CEO were asking you to sign such an agreement, they would offer some sort of incentive in return. Otherwise it seems more like an ultimatum for you to declare your loyalty.

TylerE 11y ago
Actually, contractually that gets really interesting. Basically, for a contract to be valid both sides have to give something, this is referred to as "consideration". Now, normally, with work-related contracts the consideration is "continuing to employ you", but with senior mgmt (golden parachutes, stock options, etc) I bet the waters are murky.
- cstejerean 11y ago
  From what I recall "continuing to employ you" is not legally acceptable consideration, because you had the job before the contract, and therefore you are not getting anything new. If it involves a pay raise, promotion, a bonus, etc, then it can be acceptable. IANAL.
  - kylec 11y ago
    Continued employment is sufficient consideration for some contracts http://www.jacksonlewis.com/publication/continued-employment-adequate-consideration-non-compete-imposed-mid-employment-hawaii-judge-rules http://www.jacksonlewis.com/publication/continued-employment.... However, I can't imagine that if Yahoo was so desperate to retain its executives that it would fire them if they didn't sign the agreement. I'm guessing that there was some additional incentive offered.

AndrewKemendo 11y ago

Probably not. If you want people to stay, give them a decent financial incentive. I keep seeing this sentiment, but I think it's important to distinguish between "don't give your people worthless equity instead of a good salary" and "I'm just here for the money." Starting to see a lot of the latter around here and it's disheartening. Sure, broken dreams and failed visions and all of that happens, but it's part of the process when you try to do "big" things. Widespread cynicism will kill high-tech.

obrero 11y ago
> "I'm just here for the money"...it's disheartening Yaa, how awful...because my landlord accepts a share of my company CEO's "vision", as does my grocer > Widespread cynicism will kill high-tech What a laugh that the heirs, the LP's, the VC's and seeds and angels aren't the cynics, your unhappiness is the twenty-something wage slaves slaving away at all hours building products are now disheartening, because they're buying the BS less and want to keep more of the wealth they're creating. The heirs and LP's are not "here" for the money. They're in their yachts at Key West, and they have their bets spread. Woe is us, how disheartening that the people creating the wealth want to keep more of the wealth they create, as opposed to believing the fairy tales the idle class and their myrmidions are telling them.
- AndrewKemendo 11y ago
  You're fighting a strawman my friend. I explicitly stated that I was not talking about inequitable distribution of capital in a podunk startup. Indeed, in the context of this, the executives that Mayer would be seeking to incentivize with cash are already in the upper stratosphere of ownership - so given that as a background my slant should have been clear.
  - harryjo 11y ago
    Those people, including Mayer herself, are in it for the money and the power/glamour/fame. Look at Mayer -- a Google bigshot who has power over thousands of people at Google, who left because she felt overshadowed by the CEO. She went to Yahoo not because she wanted to do more/bigger/better things -- she could do anything she wanted at Google! -- but because she wanted to be CEO of something.

nostromo 11y ago

I'm sure there was some sort of bonus involved. They're called retention bonuses. Similar to signing bonuses, you can be contractually obligated to pay them back if you don't stay for the term of the contract. Most companies will keep retention bonuses very hush-hush.

iofj 11y ago
Aren't retention bonuses in terms of cash you have to pay back if you quit illegal ? (Note: cash paid if you're still there after a period is very much legal)
- jfb 11y ago
  It would be structured as a loan.

smt88 11y ago

It's not enforceable. In the US, you can't enforce an employment contract if it involves forcing someone to work for you. This was partially legislated as a legal defense against indentured servitude.

rhino369 11y ago
You can't get "specific performance," where the court physically forces you to uphold the agreement. But it is enforceable in that Yahoo could sue for damages. The damages probably wouldn't be all that high though. It is more of an issue when the employment is something unique. Like a start athlete or movie star. You can't just find another person to play Tony Stark in Iron Man 4. But there are plenty of people who can be a Yahoo executive, relatively speaking.
- sjg007 11y ago
  But Batman gets replaced all the time... The only thing that would give leverage would be a clawback provision on the retention bonus and/or vesting.
pkaye 11y ago
What about retention bonuses?
- smt88 11y ago
  You can certainly be forced to pay back a bonus you received by agreeing to work for the company for a certain amount of time. All I'm saying is that a court can't make you work for any company, even if you sign a super-official-sounding document saying "I'll work for this company for ___ years".
jedberg 11y ago
> In the US, you can't enforce an employment contract if it involves forcing someone to work for you. Well kind of. Technically you can't force them to work, but you can force them to pay someone else to work in their place. Most teachers have this kind of contract. They are not at will employees. They can't be fired during the school year and they can't leave either. If they don't show up to work, they have to pay the school back for the part of their contract they did not fulfill to pay for the substitute teacher. (This has nothing to do with tenure, BTW, it's true for tenured and untenured teachers alike).

paulsutter 11y ago

Driven people want purpose and to be part of a team thats making an impact. It's toxic to demand written agreement to stay. The request itself says "Things are so bad that nobody wants to be here. Maybe if we all sign this paper, then at least we're all in the same boat". (Side note: money is among the least effective incentive. Waiting for a large incentive payout just makes the time more miserable.)

JabavuAdams 11y ago
Yeah, desperation is not enticing.

hueving 11y ago

A standard vesting schedule is basically what is described there. An agreement to stay with the company and if you break it, you don't get your options/stock.

twblalock 11y ago

I would imagine that recruiting is harder for Yahoo than retention. It must be very difficult for them to attract good people, at all levels of the organization.

shostack 11y ago

Talk about a gun to your head. If they don't, I can only assume they are short-listed under the "Not Loyal" column. Definitely curious about what sort of carrot/stick might be attached to such an agreement to make it even worth attempting that tactic.

melted 11y ago

_If you want people to stay, give them a decent financial incentive._ Nah. That doesn't work (assuming you're already paying well). Best people will consider this a sign of desperation and leave, and bottom of the barrel will stick around for stuff to vest. Fail/fail.

plinkplonk 11y ago

If you turn this idea around and employees (especially engineers) insisted that companies guaranteed employment for three years and give it in writing, there would be gasps of horror. Marissa must be truly desperate.