SUNNYVALE - Yahoo (YHOO) is paying new Chief Executive Marissa Mayer an eye-popping $59 million, the company disclosed Thursday, making her one of the highest-paid tech bosses in Silicon Valley.
"She hit the jackpot," said Charles Elson of the University of Delaware's John L. Weinberg Center for Corporate Governance.
Mayer's total compensation this year is $56 million in stock and options, $1 million in salary and a $2 million bonus, according to Equilar, an executive compensation data firm.
That pay level would have ranked the first-time CEO third behind second-place Larry Ellison's 2011 total pay of $77.5 million in this paper's What the Boss Makes survey of 198 publicly traded Bay Area companies. It is more than double what her predecessor made.
Silicon Valley's other female CEO, Hewlett-Packard's (HPQ) Meg Whitman, was paid $16.5 million in 2011, almost all of it in stock options.
Mayer, 37, on Tuesday jumped from Google (GOOG), where she was employee No."ˆ20 at a company with a great future, to become the second CEO this year at a company with a great past and an uncertain future.
Now much of Yahoo's fate depends on whether the company's board of directors has finally found the leadership it needs to recover the momentum the Internet company has lost in the past several years.
Mayer, like her two predecessors, came to the company from the outside. Executive compensation specialists say hiring an external candidate can force a company to pay a premium.
"When you go outside, you have to pay," Elson said. "But if she can turn this company around and double its value, people will be happy. If she doesn't, it will just be another one of a long line of folks who have tried, and the company will have spent a lot of money in the process."
Executive compensation packages have many components, and Mayer's is no exception.
In addition to her $1 million salary and bonus of $2 million; Mayer gets $12 million in stock which vests over three years and a $30 million retention award that vests over five years. Half of that is in restricted stock and half in performance-based stock. She also receives $14 million as a "make whole" payment to partially compensate her for what she lost in leaving Google. Her compensation at Google wasn't disclosed in corporate filings.
Her pay package could total roughly $100 million over five years, according to Yahoo.
"Stratospheric," said Eleanor Bloxham, CEO of the Value Alliance and an executive compensation expert.
"I really think that boards need to step back and start thinking of some sense of reason with respect to what they pay, and what the motivations of the CEO should be. I would hope her motivation is because she wants to make this into a great company. What one gets paid ought to be secondary to that."
Yahoo said that without the make-whole payment, about half her compensation is performance-based.
The last line of her employment offer shows the board is intent on avoiding another fiasco like the résumé problems with its last CEO, Scott Thompson. It reads: "Background Check. Please understand that this offer is contingent upon the successful completion of your background check." Thompson's offer letter did not have that language. He left the company in May after four months when questions were raised about his résumé. His pay package was $26 million.
In announcing Mayer's hiring earlier this week, Yahoo's board said it "signals a renewed focus on product innovation" and advertising revenue.
At Google, Mayer led the development of Google's image and product search functions, and was deeply involved in new product offerings such as Gmail. Her last position there was head of the company's multibillion-dollar focus on local and location-based advertising.
Mayer's net worth has been estimated at $300 million. She is married to tech investor Zack Bogue, and is expecting her first child. She serves on the board of Wal-Mart Stores, the San Francisco Museum of Modern Art and the New York City Ballet.
Marissa mayer's compensation
Here is how the pay for Yahoo's new CEO, Marissa Mayer, breaks down:
Total pay: $59 million
Salary: $1 million
Target bonus: $2 million
Equity of $56 million, which includes:
Restricted stock: $6 million
Options: $6 million
One-time retention restricted stock: $15 million
One-time retention performance-based options: $15 million
Make-whole stock: $14 million
Salary: $1 million
Target bonus: $2 million
Equity of $56 million, which includes:
Restricted stock: $6 million
Options: $6 million
One-time retention restricted stock: $15 million
One-time retention performance-based options: $15 million
Make-whole stock: $14 million
