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Yahoo spends $58 million to fire its chief operating officer

washingtonpost.com

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Re: Yahoo spends $58 million to fire its chief operating officer

#71

Post by ChuckMcM »

bedhead wrote: post #34

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…

Let me play devil's advocate for a minute.

The guy's cash compensation, $500k. That is a about 2x what Google pays their top engineers (about $250k) The rest of his package was stock. [1]

The compensation theory goes that if you do well the stock will do well, if you do poorly the stock will do poorly. So most of your compensation is a chunk of stock, in this case about 2.5M shares as "RSUs" (a restricted stock grant with performance tuners tweaked to company performance)

de Castro's stock did well because of the Alibaba thing not because of what he did. So that left him with a chunk of stock. Had the company done poorly that would have been worthless. It could still become worthless. The filing indicates he got 1.5M shares in restricted stock, he no doubt will have to sell a chunk of that to pay the taxes on those shares (it will be treated as ordinary income by the IRS) and California.

When these stories are reported they pick the biggest cash number they can, but the actual value may be significantly less. Large stock grants are a tool to keep executives interests aligned with the company interests, they are given a lot of stock and huge restrictions are placed on their ability to sell that stock.

Had he stayed at the company, the restrictions on selling would have prevented him from realizing that stock value immediately.

[1] http://www.sec.gov/Archives/edgar/data/1011006/0001193125141...

Re: Yahoo spends $58 million to fire its chief operating officer

#72

Post by chillingeffect »

frandroid wrote: post #56
thenewbtg wrote: post #48

Earlier quoted context omitted.

There is nothing we can do, really. Money is very close to power, and obviously the relatively poor (those who rely on a salary) have far less say and control than the extravagantly paid (those who do not require a salary). It is a fundamental trait of our free and capitalist society. We're merely mourning obvious inefficiencies, "bugs" in the convoluted system of laws and philosophies and culture that govern our soc…

Sure, we can do something. It's called popular political action.

Also, we can encourage one another to shift our consumption habits-

If Coke is earning so much money and misbehaving, let's patronize other soda companies!

If Yahoo is doing the same, let's spread out to other mail and search providers!

Re: Yahoo spends $58 million to fire its chief operating officer

#74

Post by yesiamyourdad »

rokhayakebe wrote: post #30
sillysaurus3 wrote: post #3

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?

I recently talked to a friend, an actual user of Yahoo products, who expressed happiness with the improvements they've made recently. They were referring to both the portal and web mail and they are very happy with the company as is.

Then there's my wife who calls me in for tech support on Yahoo mail on a daily basis. Hates it more with every update.

I use Yahoo Finance frequently, and they've put some lipstick on that pig, but it essentially hasn't changed since about 2002.

If Yahoo is doing anything useful in terms of development, they're doing a lousy job showing it off.

Re: Yahoo spends $58 million to fire its chief operating officer

#75

Post by smacktoward »

nrao123 wrote: post #66
bedhead wrote: post #34

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…

Here is Marc Andreeseen's interesting take on why exec compensation maybe high: Conventional theories of exec compensation being so high either (1) what market can bear or (2) board/mgmt agency problem out of control. Alternate theory is exec comp so high as insurance policy against catastrophic visible public failure; exec firings can be career ending. From this standpoint, top exec especially at highly visible and…

Or there is the simpler explanation that executive compensation is high because there's nothing to stop executives from looting their companies anymore. The traditional forces that would have restrained them (public shame, strong boards, shareholder conservatism, labor unions, tax consequences, etc.) are all at historically weak levels today, so there's nothing stopping executives from raiding the cookie jar. And each time one of them does, he pushes the compensation level all the other ones feel they have to reach to be "in the game" higher, creating a vicious circle.

Like most things in life, executive compensation is about power. And when one side has all the power, it's not surprising to see them use it to enrich themselves.

Re: Yahoo spends $58 million to fire its chief operating officer

#76

Post by mkohlmyr »

RighteousFervor wrote: post #63
SandB0x wrote: post #61

Earlier quoted context omitted.

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.

Overall, the comments there are a more enjoyable read.

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.

Re: Yahoo spends $58 million to fire its chief operating officer

#77

Post by bluthru »

dworin wrote: post #47
sillysaurus3 wrote: post #35

Earlier quoted context omitted.

Just that Jobs turned a company from the brink of failure to the most successful tech company pretty quickly. But since Apple is an outlier, I was interested in hearing about any other examples of CEOs who have caused big improvements in short amounts of time.

It took Jobs a while to turn Apple around. He was brought back on in 1997 and profits were relatively minimal for almost a decade. It wasn't until the release of the iPhone that they really started to soar. I can think of a few faster turnarounds: Lee Iacocca at Chrysler or Gerstner at IBM. Howard Schulz is another example of a founder returning to the company to turn it around. Some of these have done a better job t…

I'd say he "turned it around" quite quickly by killing off a bunch of products and shipping the iMac.

Apple didn't takeoff until the iPod was available for Windows, and then they went into the stratosphere with the iPhone.

Re: Yahoo spends $58 million to fire its chief operating officer

#78

Post by finkin1 »

ChuckMcM wrote: post #71
bedhead wrote: post #34

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…

Let me play devil's advocate for a minute. The guy's cash compensation, $500k. That is a about 2x what Google pays their top engineers (about $250k) The rest of his package was stock. [1] The compensation theory goes that if you do well the stock will do well, if you do poorly the stock will do poorly. So most of your compensation is a chunk of stock, in this case about 2.5M shares as "RSUs" (a restricted stock grant…

It's possible he filed an 83b election and paid taxes at the value of the stock when he received it (even though it hadn't fully vested). If so, his tax liability would be significantly less.

Re: Yahoo spends $58 million to fire its chief operating officer

#79

Post by Florin_Andrei »

nrao123 wrote: post #66
bedhead wrote: post #34

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…

Here is Marc Andreeseen's interesting take on why exec compensation maybe high: Conventional theories of exec compensation being so high either (1) what market can bear or (2) board/mgmt agency problem out of control. Alternate theory is exec comp so high as insurance policy against catastrophic visible public failure; exec firings can be career ending. From this standpoint, top exec especially at highly visible and…

> Alternate theory is exec comp so high as insurance policy against catastrophic visible public failure; exec firings can be career ending.

Sweet. Now show me where is the insurance against career-ending events (as in: being fired and not being able to find equivalent work again) for rank-and-file engineers.

What do you say? "No such thing?" Yeah, that's my point, precisely.

Re: Yahoo spends $58 million to fire its chief operating officer

#80

Post by discodave »

smacktoward wrote: post #75
nrao123 wrote: post #66

Earlier quoted context omitted.

Here is Marc Andreeseen's interesting take on why exec compensation maybe high: Conventional theories of exec compensation being so high either (1) what market can bear or (2) board/mgmt agency problem out of control. Alternate theory is exec comp so high as insurance policy against catastrophic visible public failure; exec firings can be career ending. From this standpoint, top exec especially at highly visible and…

Or there is the simpler explanation that executive compensation is high because there's nothing to stop executives from looting their companies anymore. The traditional forces that would have restrained them (public shame, strong boards, shareholder conservatism, labor unions, tax consequences, etc.) are all at historically weak levels today, so there's nothing stopping executives from raiding the cookie jar. And eac…

That would be 1 above, i.e. what the market can bear.
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