Yahoo CEO Marissa Mayer will receive $54.8 million in cash and stock if she leaves the job within one year after the company sells. On Friday night, the company released the details of Mayer’s severance package in their updated annual report.
Of the package, $3 million is in actual cash, while the rest consists of restricted stock and options.
Searching for a buyer became a major priority for Yahoo ever since posting a 2016 first quarter loss of $99 million. While the online giant has no deadline to decide on a sale, industry analysts think the company will sell between $4 billion to $10 billion within the next two months.
Active investor Starboard Value, a critic of Mayer’s management of Yahoo, has been insisting that the company find a buyer. Jeffrey Smith, Starboard’s chief executive, sits on a special committee charged with reviewing bids for the Internet company.
Many on Wall Street believe Verizon Communications will most likely take over the failing Internet company. After buying AOL for $4.4 billion, the communications titan didn’t hide that they were interested in Yahoo also.
If Verizon is the lucky buyer, AOL CEO Tim Armstrong will most likely send Mayer home. Armstrong and the Yahoo exec formerly worked together at Google, helping to make it one of the most powerful companies on the planet.
The payout to Mayer will be considerable even though the CEO hasn’t been able to keep the online juggernaut from falling. Yahoo shares were down 34 percent last year and current projections predict another 15 percent decline this year.
While Mayer was supposed to make $36 million last year as CEO, she brought home closer to $14 million. Nonetheless, she took a massive pay cut when compared to 2014 when her “reported pay” was $42 million.
If the share price had increased in 2015, the CEO would have made $36 million. Company executives also decided not to take bonuses last year.
According to a statement from Yahoo, Mayer’s income was substantially reduced because the company’s poor performance in 2015 was well below the “rigorous financial goals” that were set. Yahoo’s board wanted to the company to generate at least $4.6 billion in revenue, a meager 5 percent increase over 2014. However, the company and Mayer fell short of that goal by $500 million.
In an effort to reduce costs and increase profit, Mayer axed 15 percent of the workforce earlier this year. After the Yahoo layoffs in February, the company employed approximately 9,000 people.
With little success, the online behemoth has been trying to regain its former glory by concentrating assets on mobile, video, and social media businesses as well as hiring celebrities to help them stand out. Meanwhile, Mayer has been CEO for the last four years and has done little to stop the bleeding of its core advertising business. Despite her best efforts, the company cannot seem to catch up to competitors like Facebook and Google.
At the close of business on Friday, Yahoo stock was priced at $36.60, over double its value since Mayer took the CEO job. Much of the growth was not due to executive decisions, but more to do with the increasing value of e-commerce company Alibaba Group, which is partly owned by Yahoo.
Yahoo’s other executives stand to get a huge payout should the buyer fire them as well. Chief Revenue Officer Lisa Utzschneider will get $19.9 million, while Chief Financial Officer Ken Goldman will be paid $16.1 million. Ronald Bell, Yahoo’s general counsel, will come away with $9 million.
Yahoo has not commented about the executive severance packages beyond the report filed with the Securities and Exchange Commission. However, severance packages like the one offered by Yahoo to Marissa Mayer are quite common among publicly held companies in order to maintain stability.
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