Whatever you think about Jerry Yang, he was at least cheap. During his 18 months or so as Yahoo CEO he earned approximately $1.50. In fact, if you consider what’s happened to his 4 per cent stake in the company, his wealth actually decreased by around $750m.
So what is there to make of Carol Bartz’s much more lucrative package?
According to a filing on Thursday, the new boss will get a $1m annual salary and a target bonus of $2m, rising to $4m if she excels. On top of that is an $8m restricted stock award and another $10m to compensate her for various benefits she loses by giving up her job at Autodesk (this is not the kind of payment that corporate governance purists look too kindly on, but a reality of the CEO job market nonetheless.)
She will also get options over another 5m shares. Some of those will only be exercisable if Yahoo’s stock price rises a lot from here. But with the stock currently in the dumps, she could stand to make a killing. For instance, if Yahoo gets back even to where it was before Microsoft made its takeover bid last year – a level that at the time was considered to be depressed – she could net another $37m.
Will she be worth it?
Certainly, the deal bears comparison with the one handed to another executive brought in to save a Valley icon: Mark Hurd at Hewlett-Packard. His package included $8.7m of restricted stock (plus options that are now showing a profit of $6m) for giving up his job at NCR; a “relocation bonus” of $2.75m for moving from the Midwest to sunny California; annual salary and target bonus of $4.2m; and options over a further 700,000 shares.
Noone has been heard complaining lately that Mr Hurd is overpaid.
And look at it this way: Terry Semel made nearly $72m in 2006, making him the highest-paid executive in the S&P 500 and drawing angry protests from shareholders. The largesse shown by Yahoo’s board to its new CEO certainly sounds more reasonable than that.
It’s all down to Ms Bartz. Revive Yahoo, and she will be seen as value for money. Failure, though, would make her seem a very high-priced luxury.
