
Mayer $23M golden parachute as Yahoo names post-Verizon deal executive team - richardboegli
http://www.cnbc.com/2017/03/13/yahoo-names-post-verizon-deal-team.html
======
gloverkcn
People who are criticizing Mayer's deal are failing to realize that Mayer had
better options than taking over as head of yahoo. She was a bright star who
could have gone to any number of companies.

Nobody in the tech community would have categorized Yahoo as "ready for a turn
around". Companies that large that have been mismanaged for so long are filled
with middle managers that are better at internal politics than driving
initiatives. The odds of yahoo turning around were extremely low. They had to
put a deal together to entice someone who had a good reputation from a leading
tech company to put their name on the line to go try and sort out a giant
mess.

If your gripe is the difference between her salary and the lowest paid then I
understand. That doesn't mean you bash Mayer for playing by the rules that
society has set up. Good for her for getting paid. That makes you no different
than the middle manager who isn't helping their team push forward but instead
is sitting in meetings taking pot shots at everyone else.

Support a law that says the top executive can't make x times the total comp of
the lowest paid. Of course every law like that will create incentives to
structure companies to maximize payments to execs. those conversations would
add more to our discussion than just throwing rocks.

~~~
iaw
> People who are criticizing Mayer's deal are failing to realize that Mayer
> had better options than taking over as head of yahoo.

Could you provide sources for this? What opportunities were available to Mayer
better than being an executive of a multi-billion dollar giant like Yahoo?

Edit: I'm seeing a lot of speculative replies but none that demonstrate an 8
to 9 figure payday from 5 years of sitting in place. Does anyone have an
example of an alternative that would've yielded her this much wealth?

~~~
grandalf
> Could you provide sources for this?

Do you think that Yahoo's board decided to grant Mayer the golden parachute
out of kindness, or out of sympathy to a fellow member of the nobility?

Mayer and Yahoo's board negotiated the terms of her contract. The parachute is
meant to lure an executive who would normally not want to risk taking the helm
of such a high risk company.

~~~
michaelt

      Do you think that Yahoo's board decided to grant Mayer
      the golden parachute [...] out of sympathy to a fellow
      member of the nobility?
    

A number of explanations have been posited for the fact executive pay has
soared in recent decades while other workers' pay has remained stagnant.

Bebchuk and Fried's "Pay without Performance" attribute this to the fact that
boards routinely approve pay packages that serve the CEO rather than
shareholders, instead of bargaining with the aim of maximising shareholder
wealth.

They identify several factors underlying this - shareholder inactivity bears a
big part of the blame - but one factor is essentially yes: It's in the
interests of people who are at the top of business to approve high pay for
people who are at the top of business.

~~~
grandalf
> A number of explanations have been posited for the fact executive pay has
> soared in recent decades while other workers' pay has remained stagnant.

I think a simpler explanation is supply and demand.

If you want to hire as CEO someone who has worked in a close competitor's most
profitable business unit and is credited for much of its success and culture,
the pickings for Yahoo were quite slim. Also, Yahoo had brought in several
other highly successful CEOs, including its original founder, who had all
failed miserably. Mayer was clearly a last-ditch attempt to salvage the
company.

> pay packages that serve the CEO rather than shareholders

You are describing incentives that do not simply reward share price growth? If
so, and if you think supply and demand for qualified executives has nothing to
do with it, what kind of pay package do you think Yahoo should have offered?

I'd argue that there has to be a time bias in the package. Share price growth
is fine if the board is OK with Mayer taking 30 years to grow the company into
a bigger valuation just before deciding to retire. But if more action in the
near term is desired, and behavior other than the typical private equity style
fat trimming is desired, what options are left?

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ChuckMcM
So nearly a $100M pay cut from the original exit package valued at "up to"
$110M[1]. I still think she is the perfect pick for COO of Uber.

[1] [http://money.cnn.com/2015/12/07/technology/marissa-mayer-
sev...](http://money.cnn.com/2015/12/07/technology/marissa-mayer-severance-
package/)

~~~
acjohnson55
Or CEO. They need a change at the top IMO.

~~~
ChuckMcM
I was thinking more about the "optics." What says you are serious about sexual
harassment in the workplace then putting a woman in the role of being able to
evaluate and fire the harassers. I also think Marissa needs a bit of
rehabilitation in her career, the Yahoo! period did not, in my opinion,
improve her 'brand'. So the COO job where the 'company killing decisions' are
someone else's and the execution against goals is all on her, would give her a
chance to show that she can move the company to achieve its goals, and thus
burnish her reputation for more than just product focus. In my experience
watching the comings and goings of executives in tech it's rare when there are
two executives that need each other this much.

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danso
I'm assuming this amount was agreed upon before she accepted the job at the
helm of a company that was expected to go the way it did, e.g. split from its
most valued asset, Alibaba? I don't see that as being a "reward" for failure.
Although I do wonder what was the point of having a high-profile CEO when most
shareholders were waiting to cash out on the Alibaba sale?

In 2013, Bloomberg estimated that Yahoo's non-Alibaba worth was "as little as
$4 billion" [0], so getting sold for $4.4 billion 3 years later isn't success,
but it isn't abject failure either.

[0] [https://www.bloomberg.com/news/articles/2013-10-16/how-
much-...](https://www.bloomberg.com/news/articles/2013-10-16/how-much-is-
yahoo-worth-without-alibaba-not-much)

~~~
rayuela
That's an annual return of 3.2% during a period of time when the S&P500 did
18.9%. That's a pretty shit return if you ask me.

~~~
danso
The 10-year chart of Yahoo's stock shows that the company had sunk to a
plateau of ~$15/share from 2008 to 2012, after peaking at $31 in 2007. I'm
assuming the stock's steep rise post-2012 was related to the anticipate sale
of the Alibaba stake:
[https://finance.yahoo.com/chart/YHOO#eyJtdWx0aUNvbG9yTGluZSI...](https://finance.yahoo.com/chart/YHOO#eyJtdWx0aUNvbG9yTGluZSI6ZmFsc2UsImJvbGxpbmdlclVwcGVyQ29sb3IiOiIjZTIwMDgxIiwiYm9sbGluZ2VyTG93ZXJDb2xvciI6IiM5NTUyZmYiLCJtZmlMaW5lQ29sb3IiOiIjNDVlM2ZmIiwibWFjZERpdmVyZ2VuY2VDb2xvciI6IiNmZjdiMTIiLCJtYWNkTWFjZENvbG9yIjoiIzc4N2Q4MiIsIm1hY2RTaWduYWxDb2xvciI6IiMwMDAwMDAiLCJyc2lMaW5lQ29sb3IiOiIjZmZiNzAwIiwic3RvY2hLTGluZUNvbG9yIjoiI2ZmYjcwMCIsInN0b2NoRExpbmVDb2xvciI6IiM0NWUzZmYiLCJyYW5nZSI6IjEweSJ9)

Maybe the rest of the market was growing, but it didn't seem like Yahoo sans
Alibaba was heading in that direction.

------
Upvoter33
that is a sweet way to fail. don't blame her, though. there is only one real
solution to this problem, unfortunately: much higher taxes once you start
raking in absurd dollars. odds of that happening in US in near future: low.

~~~
neogodless
"You get what you incentivize."

If you want efficient production, you don't tax production. You tax
consumption. While I may personally think million dollar paychecks are silly,
and that the value created doesn't align with the compensation, I'm not
convinced that increasing taxes along with income (i.e. loosely correlated
with production) is the way to go. Instead, tax consumption.

In other words, if you're going to get taxed all to hell to buy a pointless
yacht and $250 million homes, you might not want to do that, quite as much, so
you might not care as much about making an extra $20 million, so you might not
negotiate such an obscene paycheck. (Maybe you'd even care more about the
value you bring to the table and the humans in the picture.)

~~~
mybrid
History tells a different story. When the income tax was first implemented it
was not long ere any income over one million dollars was 100% taxed. During
Eisenhower's two-terms in the 1950s the top tax bracket was 75%. It is
interesting to consider that when the modern conservative wants to return to
the American prosperity of the 1950s if, like you, conservatives would be
willing to return to Eiesenhower's tax brackets and tax production.

A better historical argument can be made that America should have never
switched from a dividends approach to the stock market during the late 1970s.
Our current system rewards quarterly gains for long term losses and this has
lead to the various bubbles. I can easily argue we should return to Eisehower
tax brackets and also a dividends approach to stock market gains and in doing
so history is on my side.

~~~
opo
There is a huge difference between top marginal rates and actual effective tax
rates. Since 1950, federal taxes have consumed 17 to 20 percent of GDP in
taxes. Most economists are opposed to very high marginal tax rates though due
to the inefficiencies they introduce - compensation being moved to non-salary,
money wasted on CPAs, lawyers and lobbying congress for special deductions,
dead weight losses for economic activity that isn't done, etc.

Currently the effective rates are fairly close to the past for high wage
earners, lower for low wage earners.

>...In 1958, approximately two million filers (4.4% of all taxpayers) earned
the $12,000 or more for married couples needed to face marginal rates as high
as 30%. These Americans paid about 35% of all income taxes. And now? In 2010,
3.9 million taxpayers (2.75% of all taxpayers) were subjected to rates that
were 33% or higher. These Americans—many of whom would hardly call themselves
wealthy—reported an adjusted gross income of $209,000 or higher, and they paid
49.7% of all income taxes.

>In contrast, the share of taxes paid by the bottom two-thirds of taxpayers
has fallen dramatically over the same period. In 1958, these Americans
accounted for 41.3% of adjusted gross income and paid 29% of all federal
taxes. By 2010, their share of adjusted gross income had fallen to 22.5%. But
their share of taxes paid fell far more dramatically—to 6.7%. The 77% decline
represents the single biggest difference in the way the tax burden is shared
in this country since the late 1950s.

[http://www.wsj.com/articles/SB100014241278873247051045781516...](http://www.wsj.com/articles/SB100014241278873247051045781516..).

~~~
crdoconnor
"There is a huge difference between top marginal rates and actual effective
tax rates. Since 1950, federal taxes have consumed 17 to 20 percent of GDP in
taxes. Most economists are opposed to very high marginal tax rates though due
to the inefficiencies they introduce"

Most economists who say that are responding to incentives.

It's a rare economist who would admit in the same breath that this
'inefficiency' coincided (not coincidentally either) with the highest growth
rate in recent American history.

------
rl3
If only I could make that much by reading children's stories[0] to thousands
of professionals at a time in obtuse fashion.

[0] [http://www.businessinsider.com/marissa-mayer-childrens-
book-...](http://www.businessinsider.com/marissa-mayer-childrens-book-bobbie-
had-a-nickel-2015-1)

------
test678779
Question to folks here. Is it still worth joining Yahoo as an engineer (if yo
u are not able to manage Goog/Facebook/Apple/Amazon? What are the risks due to
Verizon takeover?

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mindcrash
Because the Yahoo-Verizon merger is kind of confusing: this is _not_ about the
parts (Yahoo.com, Tumblr, Flickr etc.) which are about to merge into Verizon.
This is actually about the spinoff containing the assets which will stay
separate.

Who eventually is going to run the parts at Verizon (which will not be Mayer)
is as of yet unknown I believe.

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hnbroseph
meanwhile, the median wage is ~ $30k.

things are only getting worse.

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VikingCoder
Quick reminder, there is no correlation between CEO pay and performance:

[http://www.motherjones.com/files/blog_ceo_pay_performance.jp...](http://www.motherjones.com/files/blog_ceo_pay_performance.jpg)

~~~
ilyanep
I wonder how that chart measures "CEO pay". Since the majority of executive
pay is equity (in this case, $20m of the $23m quoted figure), I'd say that CEO
performance (as measured by stock returns) pretty directly affects their pay?

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tantalor
Interesting that the future CEO will work out of NYC (presumably the 229 West
43rd Street building) rather than the Sunnyvale headquarters.

~~~
harryh
The Sunnyvale headquarters will be part of Verizon. The future CEO will be
managing a company that is basically just a holding company for Alibaba stock.

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jjtheblunt
Absurdly ridiculous.

~~~
nodesocket
In what sense? 3 million cash for an executive of a high profile public
company that's quite a conservertive cash payment for that scenario.

~~~
hn_throwaway_99
The fact that "3 million in cash and 20 million equity" is considered a
"conservative cash payment for that scenario" is basically the point: failure
on a large scale is rewarded with grotesquely obscene riches while the peons
are told to eat cake (or, rather, to stop buying iPhones so they can afford
health care).

~~~
rubber_duck
She was hired by people who agreed to pay her that under the conditions they
did - those people didn't consider it grotesquely obscene and it was their
decision - the only "problem" I see here is that you believe your opinion on
her compensation and performance should matter. It's literally none of your
business (even if you were an employee, and as a stock holder you could have
voiced your opinion by selling, hell you could have even bet against them)

~~~
hn_throwaway_99
> the only "problem" I see here is that you believe your opinion on her
> compensation and performance should matter

Given that point of view, none of our opinions here matter, so why did you
even bother commenting at all?

I don't think I have some right to change her compensation, but medium/long
term I worry about a real breakdown in society when there are such gross
displays of outsized rewards for failure.

~~~
rubber_duck
Our opinions on this specific case don't matter but HN should have higher
standard than Reddit style political feelings rants.

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SliderUp
Good for her. A ton of CEOs have done far worse for their shareholders and
done as well with their exit package.

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bahmboo
California + probable 280G = 70%+ tax

