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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

#101

Post by bedhead »

kolbe wrote: post #45
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…

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…

I manage a hedge fund, so I'm close to the issue. I have read more proxies than I care to think about, it's always the first thing I read when looking at a company.

Your question about what I'm doing about it is fair, so here goes another rant. As a manager, my feet are held to the fire every day, and my compensation is 100% formulaic. If I don't perform well, I don't get paid well, PERIOD. My pay isn't subjective, or based on what Ken Griffin earned. I have put in measures that ensure I cannot get rich for simply "showing up". Do you know what else I did? I did something that almost no other hedge fund manager in the country does, which was put in a clawback. (My auditor, who did about 2,000 hedge fund audits last year, told me exact two other fund have this) If I make money in year 1 and lose money in year 2, I will end up giving back possibly a significant portion of my year 1 fees to my investors. Why should I get to get rich from one great year, then suck afterwards with no consequences? In my industry at least, I'm doing more than 99.9% of people to fix the problems.

I WANT my incentives to be aligned. I WANT to make a lot of money, but I refuse to do it without merit or in a way that I can't feel good about explaining it to my kids. So I guess that's why I'm so maddened by the executive comp bubble, because I am trying to do something about it.

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

#102

Post by 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... 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...

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

#104

Post by mitochondrion »

sentientmachine wrote: post #81
kolbe wrote: post #45

Earlier quoted context omitted.

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…

You say Executive pay is not an asset. So if an executive owns the deed to a house, you'd agree that's an asset, but if the executive maintains a skill to be hired for 200k/day, that this is not an asset? Doesn't an executive's ability to convince a company to pay 200k/day fluctuate based on market forces just like how people price homes or tulip bulbs?

Absolutely. They cost so much more than they did before precisely because of market forces.

Good luck convincing all of the underpaid $120k/yr salaried engineers, though. 95% of the world would kill to live in the cozy little bubble of tech, but that doesn't matter because those other guys over there are getting even more.

No matter how much you have, you always want more.

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

#105

Post by TheCoelacanth »

bronbron wrote: post #68
kolbe wrote: post #57

Earlier quoted context omitted.

I don't think engineers earning six figures are relatively poor. You should learn what poor is before you say something like that. They are solidly middle class in one of the most prosperous times to be middle class. And the middle class is designed to sit between the upper (capital owners) and the lower. You're paid to augment their capital. So if they get filthy rich off of your work, despite their bad decisions, i…

> They are solidly middle class Not really. If you earn $120k a year (just over 6 figures) you're in the top 10% of income earners in the US. The fact that you think they're 'middle class' (and relatively speaking, I don't think you're wrong) is indicative of how bad the wealth gap has gotten.

The bottom 50-90% of the top 10% of earners is very much part of what is traditionally called "middle class". People in high-paying professional occupations such as doctors, lawyers and engineers have always been considered part of the middle class. The upper class is made up of capitalists and high-level executives, not people who work for a living.

Source: http://en.wikipedia.org/wiki/American_middle_class#Academic_...

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

#106

Post by omegant »

hga wrote: post #17
omegant wrote: post #2

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?

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.

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?

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

#107

Post by hga »

omegant wrote: post #106
hga wrote: post #17

Earlier quoted context omitted.

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.

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?

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-...)

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

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

#108

Post by ChuckMcM »

aqme28 wrote: post #87
ChuckMcM wrote: post #71

Earlier quoted context omitted.

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…

I have no problem with stock compensation, but why so much equity compensation? 1.5M shares in restricted stock is mind-bogglingly unnecessary. And even if you factor in taxes, he got a heck of a payday.

Under normal situations (he's employed) the stock is largely useless. There is a bunch of paperwork to fill out if you want to sell any of it, you have to pre-set the sale date and follow through almost regardless of what is happening, so its "compensation" but it isn't "cash in your pocket you can spend."

But what it does do, is give the holder the sense of wealth which is directly tied to the value of the stock. Make the stock go up and you certainly "feel" a lot wealthier even if you can't actually take action based on that feeling[1]. But you're very motivated to get that feeling and make the stock worth more. (at least that is the theory).

At the C level and even at the EVP level, you're asked to make some pretty big decisions, decisions that could turn out to make you unemployable if they look really stupid in hindsight. Sometimes the only way to get someone to take that job is to give them some assurances that even if they become unemployable they won't become homeless. (Yes, your argument is still valid, 250K shares would probably do that _at the current valuation_, the question then is risk mitigation)

I'm not saying that I agree with the decision but I am familiar with some of the reasoning that the executive compensation committee goes through when coming up with these numbers. [1] One huge loophole used to be (and may still exist) is that you can sell stock to pay off a mortgage.

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

#110

Post by mathattack »

erichurkman wrote: post #52
mathattack wrote: post #38

Earlier quoted context omitted.

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.

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

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