...internally referred to as "The Scott Thompson Clause".
Just like being a cashier at McDonalds. That bit was unexpected for me. Why would the board want to let its CEO quit without notice at any time?
(In practice, still, most exits would still have some notice. But it'd be mediated by mutual reputational concerns, not contract terms.)
I'm so glad I live in the EU, where you generally don't see clauses like this (except within probationary periods).
"Shareholders don't often see it that way."
was in response to the statement
"Organisation can function a long time without CEO. People at the very top are completely irrelevant to day to day operations."
I honestly get the impression that those shareholders were selling off, not because they thought the company couldn't function temporarily without a CEO, nor because they thought a CEO was necessary for day-to-day operations, but because they saw the CEO stepping down as yet another real sign that the company in question was dying.
I thought we were talking purely about whether shareholders think that "Organisation can function a long time without CEO. People at the very top are completely irrelevant to day to day operations.", and I don't think shareholders selling on the day of the news is a good indicator for saying they do or don't.
(edited for clarity)
The thing they fear is fear itself.
I believe it's related to the fact that uncertainty has an actual cost, and the fact that companies without CEOs (or with hastily appointed interim CEOs that were not a strategic plan) tend to not be as focused on the 2-5 year strategy as they should be. I believe it's also related to the fact that a new CEO will typically pursue a different strategy, and that consequently a solid 2 years will be eaten up (generally) in ramp-up to pursue the new goals.
Anyway, just rambling. It's late. HN is great for this.
What was surprising was not that they made the at-will relationship explicit, it's that they chose to have it that way at all. There is nothing stopping them from requiring notice before she quits, or her from requiring they hire her for at least some minimum term. You hear about having to buy-out contracts of executives all the time.
Law is sort of small hobby for me: I read every word of anything I sign and I paid a decent amount of attention in a business law class I took in college.
A great introductory book on the subject you could probably get cheaply used at a college book store is "Fundamentals of Business Law"
It goes over just about anything a small business and/or startup person would want to know (short of options, equity, and the like ) anymore you would definitely want to go with professional council on .
At will employment is a pretty standard practice is the US.
That language is in just about any offer for employment that a person would read in the states.
It basically just means "you can quit at anytime and we can get rid of you at anytime" generally except for anything that violates the employment contract or any applicable laws.
Its to help with liability and rights on both ends
"In practice, still, most exits would still have some notice."
Companies just like to have the option.
You could say it was confidence on her part. Now we could have another discussion about whether or not that was foolish but that could be the reason
"The estimated value of executive pay packages can also be calculated in dramatically different ways. After factoring in future grants of restricted stock and stock options due Mayer under her employment agreement, Yahoo said her annual compensation will be worth about $20 million annually [sic], or about $100 million during the next five years that the company hopes to retain her as CEO."
One way to answer your question, would be to say: It seems the shareholders of Yahoo! are willing to pay a fair commission to someone in exchange for an increase in the value of their stock (with optimism that Mayer's leadership will result directly in this happening).
But that's not actually value generated. It's value captured from the grand casino of the stock markets. Yahoo! itself is not holding 1 billion more dollars at the end; Yahoo! shareholders are collectively, all tens of thousands of them, holding 1 billion in potential gains should they all sell their stock in some way that won't crash the stock price from the sudden sell-off.
If she gets Yahoo back onto the expressway, she will be responsible for the success, although all the employees working together will be implementing the success.
You may not like that that's the way it works, but I think it's impossible for the CEO to fail to have a huge impact unless the company's run terribly. I also think it should be trivial to see that, given that the CEO has such a huge impact on the direction the output of this large number of employees takes, that the CEO's actions have an enormous impact on the value the company provides, and consequently the profit the company derives.
If the CEO of Yahoo decided that their best move was to pursue 1990s era AltaVista style search, combined with the idea of 'being a homepage' (which afaict is their current strategy, plus destroying good products), I think it'd be hard for you to NOT recognize that they would be destroying value in the company at a much higher rate than $150M/year. The CEO, personally, would have that impact. If the employees were more efficient at their jobs, or less efficient, it would have little impact (rounding error) in the overall impact of this policy pursuit.
CEOs are the company, for many purposes. Why shouldn't they be paid accordingly?
Ergo, CEOs actually do have quite a bit of value.
Only the CEOs and their hangers-on actually believe that.
Like I said, it's still very low for a CEO salary.
Thats a TON
Letter: "Your starting annual base salary will be $83,333.33"..
Me: O_o That's it?
Letter: " per month"..
Me: O_O Ohhh!!
And it only gets better from there with the incentives and awards packages. Yes, there's a lot of work to be done. Being the CEO isn't just putting your feet up and yacking out orders. You gotta work your butt off. Not only for you, but the people who are counting on you to move the company in great direction.
I hope Marissa does well. Yahoo! hasn't been relevant for years now and I hate to see them just go away. We need more competition out there and I'm sure there are a lot of brilliant minds that can pull things together.
As for me, I need to work even harder/better if I ever wanna see that kinda scratch.
Just noting, but Massachusetts never really stopped being Puritan. Oy gevalt.
After your second year of work at a company, you get 5 weeks vacation per year. The official number for this is 30 days, but that's counting Saturdays. Nobody works 6 days per week, so in reality this is 25 days.
On top of those 25 days, there are public holidays. On average 7 of them fall on weekdays per year.
This gives us a grand total of 32 days per year on average.
I'm not sure why that surprises me.
It surprised me that Marrisa Mayer was allowed to quit Google and then start at Yahoo the very next day, is that common?
"It also only applies if one is fired from said previous employer, not one who's left at will."
Are you referring to California here, or non-competes in general? If the latter, I'm, pretty sure that you're incorrect. " The use of such clauses is premised on the possibility that upon their termination or resignation, an employee might begin working for a competitor or starting a business,..." (top of same Wiki page)
Also, fired/quit doesn't affect non-competes.
Its CA law. From the business and professions code .
In other words, nobody can enforce a clause preventing a programmer from programming for company B after leaving company A purely on the basis of restricting competition.
They may have a case if e.g. company B contracted company A to do some work and then bought out company A's programmer (e.g. to save money), but only if the contract between company A and the programmer in question has a restraint specifically penalizing this scenario.
(Even then, it doesn't mean companies will choose to enforce the contract. I've worked for companies where the restraint was between the companies A and B, and in the interest of preserving business relationships, company A decided not to pursue their legal right to recourse when company B poached an employee from A; the employee did not break conditions of their employment with A as the restraint was between their companies.)
The CEO offer letter is one such material change - as the shareholders are technically paying her. Most people aren't material changes - hence their offer letters are not published.
* $1 million/year in salary;
* up to $2 million/year in bonuses;
* $14 million in restricted stock & options vesting over three years ($4.7 million/year). Restricted means she won't get these if she leaves before they vest. The real value of these depends on the future value of Yahoo stock
* $30 million retention bonus if she stays 5 years
That's $59 million for the first 5 years ($5M + $10M + $14M + $30M). Yahoo says they expect to pay her a total $100 million over that time period -- they'll award other things on top of these.
Anyway I'm not and I guess we live in totally different worlds...
Up to 4mm in annual bonus if she exceeds goals defined by the board
Roughly 45mm in equity vesting over 5 years.
> "provided that, in each case, you are employed by the Company on the applicable vesting date or as otherwise provided herein"
So unless she beats the current CEO lifetime running average she will only see 9mm of that 45mm. Minus the fact that half the stock are options.
Seriously though I'd bet that Google studied the value of Yahoo's traffic especially in Asia and decided getting someone on the inside makes business sense. Why should Yahoo take the fantasy sports cake for example? Wouldn't it fit right in at Google Plus?
There are many good obvious reasons to accept a better job at a non-competitor, or a strong competitor, but on the surface, going to a struggling competitor seems odd.
It is worth exploring. One thing that keeps coming up in my mind is that Google is regularly mentioned in context of anti-trust stuff. That is a big deal. I honestly wouldn't be surprised if Google bigwigs sent Ms Mayer to Yahoo with a blessing, saying "make Yahoo good again, we need competition". Conspiratorial sounding, yeah sure. But at the same time, completely reasonable, and totally explains what would look like an otherwise conflicted loyalty/position.
A strong yahoo also helps (everyone really) on the Facebook front.
A strong yahoo also will keep Google sharp. All of their best innovations came when they weren't the clear winner, so some competition may help invigorate the innovation again.
I wouldn't put it past Sergey and Larry to grok all of this, and say to their trusted people, "look its better if some of you guys move to our competitors, it's good for all of us, you guys can actually make that happen."
I'm sure Marissa's departure was considered a huge loss at Google, especially to go to Yahoo. No company is ever happy to lose an executive.
To be fair after reading a bit more and thinking about this it could be a vanity move motivated by the promo skip.
Besides, maybe she really believes she can turn the company around - who will be laughing if/when that happens?
I don't think this is a mole planted by Google, there are plenty of other ways to figure out what's going on there besides proactively having one of your best performers leave the company.
I'm speculating, but reasonably certain Mayer went there because she was already thinking of leaving Google, after being shut out of Page's executive inner circle. Reading between the lines (and based on input of two friends who have worked with her), it wouldn't be off base to think she's going to try to outgun Google simply to prove a point -- that they shouldn't have passed her up for promotion.
Should be interesting to watch, because I think she's motivated well beyond financial considerations -- this is about payback.