Business
Leaders – Blanca Lopez – Current Event – Lucrative Executive CEO Compensation Plans.
In
the ongoing battle between internet companies Yahoo and Google, Yahoo made a
splash this past week by hiring Marissa Mayer away from Google, and making her
Yahoo’s new CEO. In persuading Mayer to
leave Google, Yahoo offered Mayer a compensation package that she could not
refuse. According to FOX news, the
compensation package will pay Mayer upwards to $60 million over the next five
years.
According
to FOX news, Mayer’s compensation package will include a variety of stocks,
including common stock, restricted stock, a one-time retention stock, and stock
options that include performance-based stock options. Also, as part of the package, Mayer will be
awarded “$14 million in restricted stock units” to compensate for her leaving
Google.
This
compensation package makes Mayer one of the “highest-paid tech bosses in
Silicon Valley” (Mercury News). Yahoo
has been struggling to keep up with competitor Google in recent years, and in
an effort to revamp the company and boost revenues, Yahoo decided to hire an external
candidate. According to executive
compensation specialists, hiring an external candidate like Mayer “can force a
company to pay a premium” (Mercury News). For a struggling company like Yahoo, they are
hoping that infusing new leadership into the company will help bring the
turnaround they have been searching for.
However, some critics call Mayer’s compensation “stratospheric” (Mercury
News), and urge boards to reevaluate these lucrative compensation packages they
are paying CEOs.
Big
companies like Yahoo must structure their compensation packages for CEOs so
that the majority of pay is based on performance. Looking at Yahoo’s past history, they have
had a long succession CEOs who did not add value to the company (NY
Times).
Mayer will receive performance based
bonuses and stock options, but they make up a small portion of her total
compensation. Executive compensation
should be reevaluated so that CEO pay will be largely tied to performance. This way, a company such as Yahoo will not lose
so much money the next time a CEO fails to perform.
Relevant
articles used in blog posting:
1. http://www.mercurynews.com/business/ci_21113156/yahoo-ceo-marissa-mayer-gets-1-million-salary/
1.
Carey, Pete.
"Yahoo Pays New CEO Marissa Mayer $59 Million." MercuryNews.com. N.p., 19 July 2012.
Web. 21 July 2012. <http://www.mercurynews.com/business/ci_21113156/yahoo-ceo-marissa-mayer-gets-1-million-salary/>.
2.
Perlroth, Nicole. "Lavish Pay Helped Lure Yahoo
Chief." Bits Blog. N.p., 19 July 2012.
Web. 21 July 2012. <http://bits.blogs.nytimes.com/2012/07/19/yahoos-mayer-gets-hefty-pay-package/>.
3.
Prial, Dunstan. "Yahoo's New CEO Mayer Lured From
Google With Up to $60M Pay Package."
Fox Business. FOXBusiness, 19 July 2012. Web. 21 July 2012. <http://www.foxbusiness.com/business-leaders/2012/07/19/yahoo- new-ceo-mayer-lured-from-google-with-up-to-60m-pay-package/>.
I agree with you on looking into the CEO compensations. Yahoo is wanting to excel and are willing to pay the price for it. One item that I had notice is that Yahoo has had five CEO within the last five years a reported. So are the CEO’s not cutting it and/or does the board want unrealistic results immediately.
ReplyDelete