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Yahoo's Marissa Mayer could get $55M in severance pay
- remarkEon 11y agoI know it's been asked before, but is there a critical function Yahoo! serves right now that would have to be replicated immediately if they went away? I honestly cannot think of anything that couldn't be reproduced by other tech and media companies rather quickly. Disclaimer: I use no Yahoo! products other than Yahoo! Fantasy Sports for fantasy hockey.
- xyzzy4 11y agoYahoo finance
- heimatau 11y agoMost don't realize it but Yahoo Small Business and their storefront/hosting efforts generate a lot of revenue for them. But most of their revenue is from ads.
- skuhn 11y agoYahoo already indicated that they don't care about that product. It was their pick to get spun off along with the Alibaba stock as Aabaco: https://www.aabacosmallbusiness.com/ https://www.aabacosmallbusiness.com/ Since the actual spinoff seems to have fizzled, Yahoo does still own them, but I can only presume they did serious damage to its user trust by leaving it in this limbo state. They also claimed revenue of $50 million a year when they announced the spinoff, which is not exactly big money for a place Yahoo's size.
- rdl 11y agoI'm curious what she'd do next. She obviously wouldn't have to work, but I can't imagine her just retiring.
- w1ntermute 11y agoPossibilities: 1. VC 2. 2nd-in-command at a unicorn 3. Starts her own company
- gohrt 11y ago4. 1st-in-command at a startup https://plus.google.com/+VicGundotra/posts/EZUDceAqSr1 https://plus.google.com/+VicGundotra/posts/EZUDceAqSr1
- 0xmohit 11y ago#3 is impossible (unless someone else has poured in all the money).
- rdl 11y agoShe is "rich" by any reasonable standard -- I assume her net worth is in the hundreds of millions of dollars. She could presumably self-fund a reasonable company for years without affecting her assets substantially. (There may be other reasons why she won't or can't do it, but $5-10mm isn't one of them.)
- rdl 11y agoVC seems like the default (well, "investor" somewhere, not necessarily a real full-time GP...could be an angel, too) A nonprofit would also be an interesting choice.
- HappyTypist 11y agoStock compensation to executives should be in the form of options with a strike price around market value.
- resist_futility 11y agoMaybe someone here can explain but why would another large company such as Verizon want to buy dying brands such as AOL and Yahoo? The user base of such sites is drying up. They could be replaced by Google tomorrow if people just stopped using them and went elsewhere for the same information and services. The brands themselves are losing value everyday as a new generation grows up without ever knowing what they were.
- zzalpha 11y agoAOL isn't a "dying brand". It's a massive player in digital advertising, and Verizon bought them for the same reason Comcast bought Freewheel.
- mliker 11y agoLOL. Those who think "AOL" is a "dying brand" on here are the same ones who think Node.js is scalable and reliable.
- w1ntermute 11y ago> They could be replaced by Google tomorrow if people just stopped using them and went elsewhere for the same information and services. Because people won't "just stop using them." Yahoo's current users aren't the early adopter type. They don't like change, or trying new things.
- gaius 11y agoTo be fair, they WERE early adopters, that's how they ended up on Yahoo in the first place. It's the GMail crowd who showed up late, when everyone was getting webmail.
- rdl 11y agoI was an active Internet user before/during Yahoo!'s rise -- it was NEVER the choice of technical early-adopters. (Flickr kinda was, as an acquisition, in a narrow space) It was always the kinda-dowdy boring brand for non-technical people. Even at the very beginning it wasn't even the go-to link list for smart/knowledgeable people. Yahoo! Mail was for people who were too unresourced to have their own mail accounts or maintain university/work/etc. accounts.
- aaroninsf 11y agoIn the cold light of history, executive pay in this epoch is going to shock. Executive 'severance' shall not be comprehended at all. Something is very, very, very wrong in our culture.
- Gratsby 11y agoThe pool of people who are capable of leading a company the size of Yahoo isn't that big to begin with. Add to that the fact that Yahoo had a recent serial history of hiring then firing CEOs before they brought in Mayer, and the pool of potential people to fill the spot shrinks again. Yahoo had no pathway to success and was likely to fail spectacularly - especially given the way the board was behaving - which signified to any potential hire that it might be their last job. The pool of potential CEOs shrinks again. Of course the incoming CEO would negotiate a well-beyond-market severance package. They shouldn't even want to hire someone who didn't have the foresight to do so.
- colordrops 11y agoThis is a common argument used to justify these golden parachutes. While you may be right in the context of the current system, you completely ignore the fact that the current system is seriously broken.
- dikdik 11y agoThe "elite" are not actually elite, they are just a wealthy mediocrity. Much more capable people than Meyer are likely sitting around in a cubicle right now, but due to their lack of 'correct' connections/pedigree/experience they will never have even 1/100th the opportunity as Meyer.
- Gratsby 11y agoIf you're on the board of directors for a billion dollar search engine, who do you hire as CEO? A guy in a cubicle, or a Stanford grad who was employee #20 at google that spent a career in charge of Search, User Experience, and Location? You're acting like they just hired Paris Hilton off the street, when the reality is that she busted her ass her entire career in a field that few women have had major success in. The last CEO to hold onto the job at Yahoo as long as Mayer has is Terry Semel, and he got booted in 2007.
- adriand 11y agoIt's easy to criticize Mayer but I think the expectations of what she could have achieved were pretty wildly out of whack. I'm reminded of Daniel Kahneman's dissection of CEO performance and the book "Built to Last", in his book, "Thinking Fast and Slow": > The basic message of Built to Last and other similar books is that good managerial practices can be identified and that good practices will be rewarded by good results. Both messages are overstated. The comparison of firms that have been more or less successful is to a significant extent a comparison between firms that have been more or less lucky. > Because luck plays a large role, the quality of leadership and management practices cannot be inferred reliably from observations of success. And even if you had perfect foreknowledge that a CEO has brilliant vision and extraordinary competence, you still would be unable to predict how the company will perform with much better accuracy than the flip of a coin. On average, the gap in corporate profitability and stock returns between the outstanding firms and the less successful firms studied in Built to Last shrank to almost nothing in the period following the study. The average profitability of the companies identified in the famous In Search of Excellence dropped sharply as well within a short time. A study of Fortune’s “Most Admired Companies” finds that over a twenty-year period, the firms with the worst ratings went on to earn much higher stock returns than the most admired firms. Mayer wasn't lucky. But I bet she's far more competent than most of us.
- WalterBright 11y agoIf one has great success once, it's possibly luck. When it's 3 times, there's something else going on. Jobs did it 3 times (Apple, Pixar, Apple again). Gates also did it 3 times (microcomputer BASIC, DOS, and 32 bit Windows). Is Amazon's success due to Bezos or luck? I prefer to bet on Bezos rather than luck.
- LAMike 11y agoNice, she can throw a few more of her famous parties
- gkoberger 11y agoMarissa was the 5th Yahoo CEO between 2011 and 2012. Yahoo had a habit of hiring CEOs and then firing before they had a chance to make progress. She didn't want to be fired 6 months into the job. Yahoo is a big ship, and Marissa wanted time to turn it around and see results. I assume she negotiated a large severance pay not as a way of making lots of money, but rather to incentive the board to give her a chance.
- remarkEon 11y ago-> I assume she negotiated a large severance pay not as a way of making lots of money, but rather to incentive the board to give her a chance. The game theorist in me says this is probably correct. I suppose it would be helpful to think of severance pay as a hedge against the downside risk of failure. Still, it does sound kind of awful that she'll get this much money with the company itself having, essentially, negative value.
- woodman 11y agoIf the other player accepts your poison pill, then you should reconsider its effectiveness. The only rational conclusion you could draw from such a move would be "Gee, they're willing to spend at least 55 million to fire and hire as they please."
- skuhn 11y agoMarissa is the 7th ever Yahoo CEO, not the fifth CEO in a one year window. There was a lot of turnover in the 2011-2012 period, but it's mostly down to Yahoo, and also eBay, failing to do their due diligence with Scott Thompson. 1. 1995 - 2001: Tim Koogle 2. 2001 - 2007: Terry Semel 3. 2007 - 2008: Jerry Yang 4. 2009 - 2011: Carol Bartz 5. 2012 (5mo): Scott Thompson 6. 2012 (3mo): Ross Levinsohn (interim) 7. 2012 - now: Marissa Mayer
- serge2k 11y agouh huh. I'm sure that was the only factor.
- heimatau 11y agoI was hoping Yahoo would've went private like Dell. So that she'd have the time to turn the company around. She did a great job improving the tech behind their company but...Yahoo was like a 1960's abandoned nuclear silo. To reinvent their company it would be costly and with stock pressures, they weren't able to do the impossible. I personally hope YellowPages buys out Yahoo, I think they'd be able to best handle the transition to making Yahoo change into what it needs to be.
- randomsearch 11y agoCan someone give an example of a similar situation where the CEO was male? Ie an outsider brought in to save a big tech company that looked doomed and indeed was. Jack Dorsey is almost that, but he had previous involvement at the top of Twitter so maybe not quite the same thing. The reason I ask is I think Marissa has received an awful lot of particularly aggressive criticism, and it'd be interesting to see if men in her situation receive the same treatment from HN, the tech press, etc. It would be interesting to find a good comparison.
- canttestthis 11y agoNo, that comparison would be a farce since you can't account for variables other than gender when comparing CEOs.
- randomsearch 11y agoIt wouldn't be perfect but that doesn't make it farcical.
- cloakandswagger 11y agoYou're curve fitting data to a single, pre-conceived (and over-simplified) notion. This practice of manufacturing discrimination seems to be a popular tool among feminists (see: Hillary Clinton)
- moonshinefe 11y agoConsidering most CEOs are male by far, I'm sure there are dozens of cases historically where it's happened. This isn't the first time a company has been failing and they fire the CEO and hire someone else, only to fail in the end anyways.
- randomsearch 11y agoSure. But a specific example from tech in say the last decade?
- moonshinefe 11y agoSo she lasted like 4 years before the company failed? Somehow I don't feel particularly sorry for her with $55M in the bank from that job. How obscene.
- 0xmohit 11y ago> So she lasted like 4 years before the company failed? Took 4 years for the company to fail, you mean?
- nikcub 11y agoThis story is being misreported, a little. Here is Yahoo justifying her compensation in their latest annual filing: > It’s important to understand that Ms. Mayer’s performance-based equity award values in the Summary Compensation Table reflect the significant appreciation in our stock price between when the awards were originally approved by the Compensation Committee and when the applicable annual performance goals were subsequently set (the accounting measurement date). For example, our stock price increased 178 percent between July 16, 2012 (the date on which Ms. Mayer’s recruitment awards were originally approved) and March 6, 2015 (the date on which the recruitment option’s 2015 tranche was valued for reporting purposes). That option tranche had an original approval value of $3 million in 2012, and a reported value of nearly $20 million in 2015, due to our intervening stock price appreciation (which benefits executives and shareholders alike). The exercise price of the options is not lower than the stock price on the day the options/RSU's were awarded You could argue that the scheme was poorly designed since she is being rewarded for the performance of BABA, rather than the performance of YHOO. The second part is that the severance pay portion is only paid out if Mayer is fired after a change of control event on the main entity. This excludes the sale of Yahoo internet assets that are currently being negotiated, but takes effect if there is a takeover of the main entity. It looks more like a poison pill, or insurance from being fired too early for Mayer, rather compensation that is intended to be paid. In related news, Yahoo just finished up a long battle with Starboard (who got 4 new members onto the board - including 3 onto the compensation committee (which is now at 5)) who took issue with compensation - but I don't think there is much they can do right now.
- nihonde 11y agoThe thing that really baffles me is that she will be hired by another company after this for similar comp. Either that, or she'll make a credible run at political office. It's amazing how little America holds these people to account for poor performance. It literally does not matter how well they do in their job.
- deleted 11y ago[deleted]
- sbardle 11y agoYahoo replaced its native internet pioneer culture with a corporate culture too early in its development.
- netcan 11y agoExecutive pay is something I haven't heard convincing arguments about. It's obviously gone up a lot in recent decades, why? The incentives seem to be of the heads-I-tail-you-lose variety, for all the complex performance pay that it is nominally made up of. Most arguments you do hear seem to apply equally in 1950 or 1980, so why the trend? The common sense argument that a CEO is so impactful on a company so big, that CEO pay is always worth it inasmuch as it has any kind of meaningful effect on performance. 3% improvement in Yahoo's value is $1bn and you'd imagine the 1st choice CEO is worth at least 3% more that the 2nd. I reckon that kind of thinking plays a big role here. This kind of money, and the way so many of these packages seem to come with weird ways (eg severance pay) to add 7, 8, 9 figure sums in certain cases seems dangerous. Self interest is naked once these sums are in play and the room for cynical, self interested choices is very wide for a CEO.
- Erikun 11y agoPlanet money did an episode on this. As often is the case it starts with a change in regulation. http://www.npr.org/sections/money/2016/02/05/465747726/-682-when-ceo-pay-exploded http://www.npr.org/sections/money/2016/02/05/465747726/-682-...
- deleted 11y ago[deleted]
- known 11y agoHeads I Win; Tails You Lose;
- nice1 11y agoMust be justified, if the market wills it, right? I mean, given the value she's brought to the company. Reminds me of Ms. Fiorina.
- deleted 11y ago[deleted]
- jasonwelk 11y agoI guess I will never understand the business model employed by most large companies that involves paying executives such enormous sums, even in cases where the leadership failed (I say this in general, not because I think Mayer failed). It seems there is a big disconnect between performance and compensation when you get to a certain level of leadership.
- bmmayer1 11y agoAt that level, in general, boards pay CEOs that much money to leave, because the cost of them staying on to the shareholders is often many times more. The severance usually sounds like a lot compared to what you or I make, which is why it gets such bad headlines, but compared to the often billions of dollars it could cost shareholders to retain a bad CEO instead of finding a new one; it's a no brainer.
- dikdik 11y agoWouldn't it be cheaper to fire her and not give her an insane severance package? Have the "elite" somehow made it illegal to get rid of them without multi-million dollar packages? Or is this just an example of, we do it because it's always been done this way?
- hellofunk 11y agoI still don't understand that logic. What does choosing to fire someone have to do with whether or not you pay them a ridiculous severance? Are you suggesting that it is impossible to fire a CEO without giving them an absurd amount of money?
- naivepiano 11y agoThat's a google lot of money.
- cerebrum 11y agoDon't forget, she gave Yahoo a new logo :-)
- deleted 11y ago[deleted]
- Gatsky 11y agoThis is just about signalling. You negotiate a package to signal your value, and the severance signals your value to the next company that will hire you. As a counterpoint, if she offered to run yahoo for free, there is no way they would have offered her the position.
- dforrestwilson1 11y agoHighly doubt that any corporation would hire her as CEO after Yahoo. I'm not blaming her for the mess it was in when she joined and she did OK, but lots and lots of talented people can be an OK CEO.
- underwater 11y agoThe defense of hundred million dollar CEO paychecks in this thread feels like some bizarre Stockholm syndrome.
- pfarnsworth 11y agoI chalk it up to the fact that everyone here believes they are going to be the CEO of their own multi-billion dollar startup, and when that happens, they want their own $100M/yr pay package as well.
- deleted 11y ago[deleted]
- julep 11y agocosigned
- untog 11y agoThat is, after all, the hope that a lot of Silicon Valley startups (and VCs, naturally) depend upon. It was very liberating once I'd got that idea out of my head.
- dmix 11y agoIncorrect, most of us just like to build stuff. The money is a nice perk to continue building even more stuff. Becoming a successful entrepreneur means people like Elon Musk not corporate CEO's like Marissa Mayer...
- caseysoftware 11y agoI think every major company has three management stages: creators, maintainers, and mooches. The creators are the ones who bring things to life and redefine or create markets. There are very few of these people and they're often hard to work with because their very mindset requires them to ignore the rules. Elon Musk and Steve Jobs fall into this category. The managers are the ones who can take something that exists, refine and grow it, and provide stability over a longer run. They tend to be rule followers and understand "the formula" and how it works. They may occasionally have those "creator" flashes and make a leap but that's not their purpose or goal. Finally are the mooches. They know the rules and go through the motions so they're easily mistaken for the "maintainer" types but they're not there to promote stability. They want to get their piece of the pie and move on.. like locusts.
- newscracker 11y agoI hope Google buys Yahoo and makes something out of the pieces that are somewhat valuable. Like for example, Yahoo mail is somewhat good and widely used, but can be made a lot better by Google moving that into the Gmail platform.
- inthewoods 11y agoWhat I find amazing is that Mayer failed to articulate any real strategy for how Yahoo was going to succeed in the future. To me, that was her only job - get in, and find a way for Yahoo to move forward. Then execute on that strategy (hiring/firing/acquisition/etc).
- dforrestwilson1 11y agoShe was too indecisive, shifted gears too often, and tried to take too many pages from her past employers. She did everything a good executive should not do. She tried to acquire her way to growth when she couldn't stabilize the core business. She hired consultants to reaffirm things she already knew, and she spent lavishly on silly things. She was a great middle manager who was never going to be a good CEO.
- imaginenore 11y agoOh please. She fucked her way to the top by dating Larry Page and getting ridiculous promotions. As a developer and manager he was absolutely hated by her team members, there are multiple accounts of that.
- mwfunk 11y agoIt's about ethics in tech journalism!
- dang 11y agoPersonal attacks aren't allowed on HN, let alone ones as disgusting as this. You also have a history of posting uncivil comments to HN. Normally those two things would mean we'd ban you, but because your comments have been substantive and (mostly) civil lately, we won't. But please don't do it again. We detached this subthread from https://news.ycombinator.com/item?id=11600586 https://news.ycombinator.com/item?id=11600586 and marked it off-topic.
- deleted 11y ago[deleted]
- fizixer 11y agoWhen she was hired I asked (and what I imagined she probably would've asked), what is Yahoo!'s business model, how much fierce is the compeition, and how willing it is to seek other markets (that can serve as low hanging fruit). I see tech companies business models (very broadly) as being one of a few kinds: - serving masses and revenue-through-ads (the social media model) - serving masses and selling a product - serving big businesses it looks like Yahoo! was in the first category at that time and there was already market monopoly by Google, Facebook, Twitter, and so on. So continuing what they were doing already but better meant taking those companies head on, and that was an uphill battle. So I was of the opinion that the best way forward IMO would be to seek new markets and low hanging fruit, maybe explore creating a product, maybe get into hardware, maybe serve big businesses. Over the years I never heard Yahoo! do something radical, or go into a new direction, or even seek some safe investment. I might not be fully-informed though, but if that's really the case then the CEO is clearly to be blamed for it. So TBH I'm not surprised Yahoo! is still not doing well and has to be sold. Looking for corrections/more-info/thoughts in response to my comment. Thanks!
- refurb 11y agoPeople seem to forget that companies compete for CEOs. If you want someone to be your CEO, you need to pay a very high salary regardless of how your company is doing.
- maxerickson 11y agoWhat is the thing they are competing for? There's a whole lot more people than there are CEOs, so it seems you need more explanation than If you want someone to be your CEO, you need to pay a very high salary regardless of how your company is doing. I think they don't particularly know what they are competing for and that this works out nicely for CEOs. Obviously there are people that can add a great deal of value to certain situations. I don't think there is a good method of identifying them. If there was such a method, pay would be lower (or we'd have many more great companies).
- refurb 11y agoWhat is the thing they are competing for? They are competing for people to run their company? Relevant experience and skill set? Just like any other job? My point is, if you have two companies, A and B. A is on a downward slope for the past few years and needs a turnaround. Company B is on the uphill slope and is going to be a unicorn. Just because Company A is doing poorly, doesn't mean they can pay their CEO less. Why? Because the potential hires could always just go to Company B.
- ryan606 11y agoEvery journalist who reports on what they believe to be excessive executive compensation (or even what they believe to be shareholder-friendly pay) should be clearly identifying (a) the members and Chair of the Board's Compensation Committee, and (b) the Board's Compensation Consultant. Although the whole Board is responsible for CEO pay, the Compensation Committee and the Board's compensation consultant are primarily decision-makers and influencers, respectively. In Yahoo's case, Maynard Webb, Jr. is Chairman of the Board and member of the Compensation Committee. Jane Shaw (Intel) is Chair of the Compensation Committee. And Fred Cook is the Board's Compensation Consultant. Regardless of whether you think her package excessive or reasonable, these are the people who ought to receive credit or blame.