
Marissa Mayer’s Payday - swyx
http://fortune.com/2016/07/26/marissa-mayers-verizon-yahoo-pay/
======
grandalf
This is not something to be upset about.

Shareholders want near zero executive risk, and so they are willing to pay top
dollar for proven executives...

That way, if things do fail, they can be confident that scrimping to save a
few million in comp wasn't the reason they lost billions.

We overpay for quality in many areas of the economy. Neurosurgeons are one
example. Roughly 0.5 people from each of the the graduating classes of the top
10 medical schools becomes a neurosurgeon. Supply is very, very small because
the bar is so so high. Why? Because when someone is doing surgery on our
brains we are completely fine with having a 10x overqualified doc doing the
surgery.

This is similar to how the price of achieving each additional "9" of
reliability is exponentially greater than the last one.

Yet systems with 99.99999% reliability still fail, some neurological
procedures fail, and some highly paid CEOs do not lead their companies to
glory.

Yahoo's shareholders decided to hire Marissa instead of many other, cheaper
options. Nobody was duped, fooled, or scammed. Kobe misses the winning three
pointer to lose a game now and then. Mayer is the closest thing the valley had
to a sure bet for a company in need of product execution, so it's hard to
fault Yahoo for wanting to recruit her.

It's too bad it didn't turn out, but let's hope she does something risky with
all the money :)

~~~
jazzyk
>Yahoo's shareholders decided to hire Marissa

It was the Board of Directors who hired her, the shareholders are asked to
approve (essentially a rubberstamp)

She was far, far from a zero-risk hire. She had only worked for one company,
had zero executive experience at the level required at Yahoo.

Enough with the celebrity cult we shower on CEOs - leave it to reality TV
starlets.

~~~
grandalf
She'd been responsible for one of Google's most successful products, and had
been praised by the founders as a key early hire.

She'd also helped create and shape Google's culture and arguably brought with
her to Yahoo several billion dollars worth of Google's trade secrets and
operational strategies, not to mention her knowledge of key players inside
google who Yahoo might be able to poach to accomplish specific initiatives.

Yahoo had already tried a media exec and its own founder, neither of whom
could figure out a recipe for success.

~~~
jazzyk
1\. Being a good Product Manager does not a CEO make.

2\. Her poaching Google stars? She hired and, 15 months later fired, Henrique
De Castro, whose "severance package, estimated to be more than $60 million,
was one of the largest golden parachutes ever given to a terminated executive"
[1]

3\. >neither of whom could figure out a recipe for success

Steve Jobs turned around Apple after a couple of disastrous CEO before him
(Sculley, Amelio, etc)

[1]
[https://en.wikipedia.org/wiki/Henrique_De_Castro](https://en.wikipedia.org/wiki/Henrique_De_Castro)

~~~
grandalf
Perhaps Jobs could have turned around Yahoo, perhaps not.

------
gvb
There are two ways to look at Mayer's payday:

1\. She is getting rewarded even though her performance as CEO of Yahoo! was
way less than expectations. Expectations being the salvation of Yahoo! as an
independent company.

2\. She is being rewarded for selling Yahoo!

People are focusing on #1, but that is really past performance and past stock
grants. She has plenty of previously granted stock based on previous
performance, but she did not achieve everything she could have: _This past
year, Mayer had to forfeit just over 400,000 of those performance shares._

Once the "for sale" sign went up, her incentive became " _sell_ Yahoo!", not
"save Yahoo!" because that is what her incentive (severance package) aligned
with the moment the "for sale" sign went up.

I expect that the Board understood this very well when they created her
severance package.

------
rdtsc
So she does know how to negotiate, it just has to be for her personal gain.

> Yahoo is also paying to help Mayer land a new job. During her period of
> transition, Mayer will presumably need office space, and someone needs to
> pay for it. The company will put up $15,000 for 24 months of outplacement
> services for Mayer.

> Mayer is entitled to receive her base salary, which in 2015 was $1 million,
> for two years after she leaves the company.

Clearly she set the same "you get your salary for 2 years after leaving" \+
office space package up for all the developers in the company...

~~~
vorotato
When you get hired to save a dying company, you shouldn't be slammed for the
stock doubling.

~~~
subway
When you fuck over your employees to do so, yes, yes you should be slammed.

~~~
peeters
The reactions in this thread are bizarre to me. Is it a new revelation that
CEOs are compensated to deliver the best return for _shareholders_ , and not
the employees? Why is Mayer being singled out when this is what pretty much
every CEO in the history of capitalism has been hired to do?

~~~
andyjohnson0
Why is it in the best interests of shareholders for a company to pay the CEO
for two years after they have left? When she's gone she can't possibly be
delivering value to the shareholders.

~~~
Touche
Because that's what required to get the CEO you want.

------
hullo
The level of attention that these stories about Mayer attract is kind of sad,
and really not fair. The big jump in the "payday" that the article teases is
the possibility that Mayer will sell already-granted stock. i.e. Not new comp
at all. Yawn.

------
GreaterFool
Sigh. There was a story just yesterday or maybe slightly older in WSJ about
"short list of well paying jobs" and the only thing I remember was that every
second word was "manager".

------
atonse
I have to say my favorite part is how they have to pay her health insurance
premiums ($2k/month) for 2 years.

I need to up my negotiation game. :)

Plus, 2k a month? I can't even imagine what amazing Super Platinum plan she
must have.

~~~
mgkimsal
a mid-range plan for a family of 5 here in NC can easily be $1500/month -
assuming CA is higher, and she's got a family plan, I can't imagine it's
"super platinum" but average.

somewhat OT, but ... is there any value in billionaire's having 'health
insurance'? When you are worth more than some smaller insurance companies...
what value is there in buying insurance? Aren't you already self-insured?
There may be procedures that the insurance company wouldn't fund anyway, but
you can just pay for it yourself?

EDIT: Just looked up family of 3 - higher end "blue cross" in CA may be
$1200/month. Other companies are cheaper (wow, must be nice to have so many
options! in NC, I have 2 options, and only 1 the year before, that's it).

Throw in a dental plan, and that might bring you to ~$1300/month. Add in
expected increases over the next 2 years and.. $2k/month is probably still on
the high side, but perhaps not by too much?
[http://www.coveredca.com/news/PDFs/CoveredCA-2017-rate-
bookl...](http://www.coveredca.com/news/PDFs/CoveredCA-2017-rate-booklet.pdf)
shows that there's an expected 13% average increase in 2017.

~~~
bjterry
Because of the way insurance prices are structured post-ACA, if you are old
you are getting a big underwriting subsidy. If you are a typical billionaire,
it is cheaper to purchase insurance than it is to self-insure, because part of
your costs are being borne by younger premium holders. If you are a
billionaire in your 20s you should probably self-insure for the same reason.

Under the ACA the maximum ratio between insurance rates for old and young is
3:1, but the Society of Actuaries estimates that healthcare costs for the
elderly are roughly 4.8 times as expensive[1].

1: Referenced here on page 22: [https://www.cbo.gov/sites/default/files/114th-
congress-2015-...](https://www.cbo.gov/sites/default/files/114th-
congress-2015-2016/reports/51130-Health_Insurance_Premiums.pdf)

~~~
mgkimsal
Perhaps removing the 'lifetime caps' on most services changes this?

I'd have thought, for example, if there's a lifetime cap of $10m on services
from my insurance company, and I have, say, $50m in an account just for my
medical needs, I'm more than self-insured compared to what I'm protecting
myself from with insurance. It seems 'lifetime caps' are largely gone for most
services now.

EDIT - thanks for your reply.

------
draw_down
Right, CEOs in corporate America make stupid amounts of money. That's how it
is.

I would question the motives of anyone describing this as unusual or
especially egregious. Are you upset about how business is structured now, or
do you have a specific vendetta against Mayer?

------
overcast
I think I'm going to be sick. Compensation for executives should be directly
tied to company performance. You want to be at the top, then you should take
the risk.

~~~
vorotato
Company performance has improved since she got there, check out the stock.

~~~
chki
If you read the complete article, it is explained why that is the case and why
Meyer presumably is not the one who should get the credit.

~~~
an_account
Yes, but the comment he was replying to said it should be _directly_ tied to
company performance. Normally that means stock price, which the compensation
was tied to.

------
just_observing
I wonder which lucky company will hook her up now....

------
mtgx
Relevant recent story:

[http://www.independent.co.uk/news/world/americas/highest-
pai...](http://www.independent.co.uk/news/world/americas/highest-paid-ceos-
worst-performing-companies-research-a7156486.html)

------
rabboRubble
Good for her. The only thing wrong is that I haven't managed to secure that
sort of package for myself!

------
pcunite
Human nature whether it be man or woman.

~~~
notacoward
Yep, the saddest thing about this whole thread is that yours is the only
comment to even hint at what's unique about this particular golden parachute.
CEOs have been reaping outsize rewards for failure since forever. Some have
destroyed bigger companies than Yahoo, and reaped bigger rewards than Mayer.
Yes, even some in tech. Even in search. Before Yahoo there was Excite. There's
plenty of reason to be outraged, but put a slight pink edge on that golden
parachute and suddenly the sleepers awake.

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CodeSheikh
This is unacceptable. She sold off a big chunk of Yahoo (that she could not
resurrect) to Verizon where most of the staff is eventually going to get axed
and she walks off with $122 Million. There has to be checks and balances
somewhere. Tech industry is turning into dirty Wall Street.

~~~
vorotato
Have you seen the stock? Wallstreet should be grateful.

~~~
Redoubts
[http://www.businessinsider.com/yahoo-value-almost-
entirely-t...](http://www.businessinsider.com/yahoo-value-almost-entirely-
tied-to-alibaba-stake-2016-5)

???

