
Yahoo spends $58 million to fire its chief operating officer - xmpir
http://www.washingtonpost.com/news/morning-mix/wp/2014/04/17/yahoo-spends-58-million-to-fire-its-chief-operating-officer/?tid=hp_mm
======
bedhead
It's really sad how wildly distorted executive compensation has gotten. The
best phrase I heard was "entrepreneurial reward for managerial duty", and I
fear it's become all-too-common. My eyes popped out of my head recently when I
saw that Coca-Cola (yes, that same drink company that's done just fine for
over a hundred years and whose organic growth rate _might_ be 1% if they're
lucky) was trying to give management $13 BILLION over the next four years.
It's insanity. And when it's not simple pay, it's severance packages that give
Fuck-You money to people whose performance provably dreadful. Leo Apotheker
made $25 million on his way out the door from HP, after vaporizing over $6
billion in buying a fraudulent company and doing virtually no due diligence.
It's madness, pure madness. Executive comp is a bubble, these people aren't
worth anything near this much, but I have no idea when it will pop.

~~~
kolbe
Side note: asset bubbles pop. Executive pay is not an asset.

I don't know where you work or what you do for a living, but I've heard a
similar rant about executive pay from hundreds of people, whereas I've only
ever seen a handfull of people trying to do something about it.

So, I propose to you, if this hurts your sensibilities so much, what are you
doing about it? Are you continuing to feed the machine by working as one of
their employees? Are you participating by trying to create an aqui-hirable
startup? Or are you pushing to enact change?

~~~
wpietri
I think the underlying problem here is managerialism [1], which is mainly a
cultural problem [2].

The way that one solves cultural problems is mainly by talking about them. If
enough people are saying, "Hey, this prohibition thing doesn't work," and do
it for long enough, then eventually the unquestioned cultural assumptions
dissolve.

So my question for you is: why are you standing in the way of people doing
something about it by being a jerk?

[1]
[http://en.wikipedia.org/wiki/Managerialism](http://en.wikipedia.org/wiki/Managerialism)

[2] [http://www.amazon.com/Confronting-Managerialism-Business-
Eco...](http://www.amazon.com/Confronting-Managerialism-Business-Economic-
Controversies/dp/178032071X)

~~~
Zigurd
Culture? Surely the legal framework and tax environment of corporations could
be adjusted to fix at least part of that problem.

~~~
wpietri
As with alcohol prohibition and, later, drug prohibition, I think the legal
environment flows from the cultural notions.

Managerial pay has gone up not because executives are hundreds of times
smarter or more competent than a couple generations back. It's because the
cultural notion of executives as a higher corporate caste has become much
stronger.

In other words, it's not that we rationally measured the value of CEOs and
paid them accordingly. It's that we stopped really thinking about it. In, more
ore less, the same way that people stopped thinking rationally about drugs for
some decades. The change in marijuana laws in the US is now happening not
because of new facts, but because of new attitudes.

A shift away from managerialist thinking might similarly trigger new laws. But
I doubt it will work the other way around. Especially given the new research
showing that laws basically respond only to the interest of rich people and
businesses:
[http://www.princeton.edu/~mgilens/Gilens%20homepage%20materi...](http://www.princeton.edu/~mgilens/Gilens%20homepage%20materials/Gilens%20and%20Page/Gilens%20and%20Page%202014-Testing%20Theories%203-7-14.pdf)

------
pachydermic
That video is painful to watch... I know there's clearly a bit of a language
barrier, but this guy sounds like a complete dingus. Then again, he's the guy
making a cool ~$60 mil a year so what does that suggest?

I wonder what a guy like that _actually_ does on a day-to-day basis. I could
see there being a huge amount of pressure and work to do, but maybe they just
hand it off to their underlings secure in the thought that they have a fat
severance package waiting for them if anything goes wrong.

How can you expect someone to give a damn when they have no skin in the game?
So this guy did an apparently horrible job and made millions. How does that
make sense? Wouldn't you only want him to make an obscene amount of money if
he did a good job? It really is fascinating how massive companies like that
work - I guess you can draw some similar conclusions as in politics.

------
smackfu
If you're the COO, and most of your compensation is in stock or bonuses
related to the stock price, and the stock nearly triples during your reign
(15.92 to 41.07)... you're going to get a big payout.

I also don't really buy that firing him cost this much, since much of it seems
to have been a sunk cost. That stock was going to vest eventually whether he
was fired or not, it just vested faster because he was fired.

~~~
stingraycharles
This needs to be higher on top, because it appears to be a point many people
are missing.

~~~
hkphooey
There should be claw-back provisions if an employee don't perform.

------
malanj
That has to be one of Marissa's most public mistakes yet. She was the one who
pushed very hard for Yahoo to hire him. It's interesting that a few articles I
read mention that he's really smart but not good with people. I've read that
Marissa has the same characteristics, I wonder if that gave her a blind spot
on this one?

~~~
mathattack
This is old news, right? The money and mistake was already baked into the
stock price.

To your point, we tend to like hiring people similar to ourselves because it's
comfortable and validating. In reality what we need is people who cover our
blind spots rather than share them. The great partnerships have this.

~~~
erichurkman
To quote Carnegie's self-written epitaph: Here Lies A Man Who Knew How to
Enlist in His Service Better Men Than Himself.

~~~
mathattack
I've also heard it as "As hire As, Bs hire Cs"

------
zaidf
I really feel for Jerry Yang. It seems like every Yahoo CEO and Board has been
riding the coattails of his Alibaba investment while his name is left for the
footnotes.

~~~
grmarcil
Fair point, but don't feel too bad for him:
[http://www.forbes.com/profile/jerry-
yang/](http://www.forbes.com/profile/jerry-yang/)

------
omegant
Honest question, could somebody please explain why a big corporation like
Yahoo, doesn't have some kind of cliff and progresive compensation? It's the
Article accurate?

~~~
hga
In addition to the other good answers as I write this, there's the general
principle that a troubled company like Yahoo has to pay extra to attract top
talent.

And based on all that I've heard, even more to work for a CEO like Marissa
Meyer.

~~~
omegant
I agree that you have to pay more for top talet, but I don't understand how
it's not vested. He is not aligned in getting results beyond a year this way.
The moment the stock rises he can make himself fired and cashout.

Could you please explain a bit what do they say about Marissa?

~~~
hga
For a company like Yahoo top talent is a seller's market. They have to vest
the compensation if they want to have a chance at getting the talent in the
first place.

Note that for example there's serious danger of reputational damage; someone
who joins such a company at such a high level is in danger of getting their
career derailed or worse.

As for the CEO, we can stick to straight observables: a number of people
joined the company under the condition they'd work off-site, often in roles
where that's just fine like customer support (easy metrics), and plenty of
them were nowhere near a Yahoo office.

One day she declares that if you don't start working in a Yahoo office, you'll
lose your job. As e.g. Maggie Lange at Gawker puts it:

" _Mayer famously took her position at Yahoo while six months pregnant and had
her baby last fall. However, unlike other Yahoo employees, she is able to
bring her child to work to the nursery she paid to have built in her office._
"

([http://gawker.com/5987043/yahoo-ceo-marissa-mayer-
installed-...](http://gawker.com/5987043/yahoo-ceo-marissa-mayer-installed-a-
nursery-in-her-office))

That's just the most notorious I can remember, there are as I recall a number
of others.

------
benaston
An excellent case study for the Macleod Heirarchy.
[http://gapingvoid.com/2004/06/27/company-
hierarchy/](http://gapingvoid.com/2004/06/27/company-hierarchy/)

------
sillysaurus3
I've been wondering: How's Marissa Meyer doing as CEO? I haven't heard much
about Yahoo recently except that they acquired some companies in order to get
talent in the mobile space. It's been about 1.75 years since she became CEO.
Is that enough time for a non-Steve Jobs CEO to change the trajectory of a
company?

~~~
Theodores
You are forgetting: Marissa redesigned the logo! All by herself!!!

Seriously though, what do Yahoo actually do? The mail has gone the way of
'compuserve' in that you don't very often get to see a yahoo address in an
email these days. Search was something they just gave up on, then there portal
style homepage, does anyone actually go there?

They should have stuck with search, it was something that they were reasonably
good at, but, having dropped that it is now not an easy game to get back in
to.

Perhaps they should just give up on being a branded entity and become a
faceless holding company.

~~~
matthewmacleod
This is just bombastic and ill-informed.

To start with, Yahoo has >10% of the US search market[1] – down YoY, but
nothing to sneeze at. Their sites also see more unique visitors from the
desktop than anybody else – >195m in December[2], and that's the sixth month
is a row. There are still loads of email users; finance, sport, shopping,
everything that legacy portal sites typically had.

Furthermore, Yahoo was never really a good search engine. It was basically a
curated directory until it started using Google's search in 2000 or whenever.
I think it used it's own crawler for a while, but it's been powered by Bing
since 2010 or so.

I'm aware that I live in a bit of a tech bubble — I don't use Yahoo
properties, but there are loads of people out there who use the web in a
totally different way. Yahoo's got a lot of obvious issues to deal with, but
they've also got lots of money and talent; I don't see any reason that they
won't succeed with a bit of restructuring and some strong management.

[1]
[http://www.comscore.com/Insights/Press_Releases/2014/4/comSc...](http://www.comscore.com/Insights/Press_Releases/2014/4/comScore_Releases_March_2014_U.S._Search_Engine_Rankings)

[2] [http://www.cnet.com/uk/news/yahoo-tops-the-most-
trafficked-w...](http://www.cnet.com/uk/news/yahoo-tops-the-most-trafficked-
web-site-list-for-desktop-in-us/)

~~~
keithpeter
I'm a teacher in a further education college and in adult education in the UK.
Students personal email is 50:50 yahoo/hotmail with rounding error ISP
accounts and gmail. Most of my colleagues have a non-official personal email
address and that tends to be Yahoo more than Hotmail/Outlook.

Wouldn't say any of us have a huge monthly spend or anything but I think Yahoo
have eyeballs certainly.

------
ausjke
Whoever hired him should pay the cost of this mis-judgement, at least
partially. All hires should be paid bonus _after_ you made contributions,
before then you have your regular salary. This is ridiculous.

------
gcb0
I always assumed that hiring price included him bringing clients from Google.
As that is usually what happens when you hire anyone from sales from your
competitor...

------
kereta
Let's email Mayer to work for 15 months and get $58 million too!

------
stormqloud
This is a testament to how top management destroy shareholder value and an
operating company in their own massive short term gains.

"I'll hire you for $50 million, then you hire me for $60 million, think how
much value we just brought to the company."

------
RighteousFervor
Anyone else notice that the comments at washingtonpost.com are more insightful
and succinct than here at HN?

~~~
SandB0x
Can you point out three insightful comments from below the Washington Post
piece? (Time of posting ~16:19 GMT.)

I'm seeing the standard "1%" and Disgruntled of Tunbridge Wells type comments
that you see under every newspaper article and not a great deal of insight.

~~~
RighteousFervor
Overall, the comments there are a more enjoyable read.

~~~
mkohlmyr
You must be reading a different set of comments from me. Overall I see quite a
lot of short low-information / trying-to-be-funny / plain ignorant comments
that add very little value to the story.

------
leccine
Executives salaries are always a hot topic in certain countries, not to much
in the US though. Swiss people got so upset there is an entire movement
limiting the CEO salaries to something sane. [http://blogs.reuters.com/great-
debate/2013/11/15/swiss-outra...](http://blogs.reuters.com/great-
debate/2013/11/15/swiss-outrage-over-executive-pay-sparks-a-movement-in-
europe/) I guess it would be good to put a cap on exec compensation, it is
just simply unfair to other workers especially given the poor performance...

------
6d0debc071
Yahoo seems to have a certain difficulty in making the best use of the people
it works with. Flickr springs to mind. If they're firing him just because he
gives sucky presentations - which seems to be the only guess the article has -
then that's on them.

------
lifeisstillgood
I'd have done it for them for half that :-)

~~~
barking
Stop underselling yourself!!

~~~
lifeisstillgood
Wow, I think that's my biggest ever karma loss. Ah well.

