USA TODAY International Edition
$ 4.8B buyout of Yahoo jump- starts online war
Mayer scores $ 139.6M during troubled tenure
It’s the end of Yahoo as we know it since Verizon bought the Internet company for a fraction of what it once was worth.
But CEO Marissa Mayer did very well for herself.
The CEO of the fallen Internet giant was paid $ 139.6 million over her four years of service at the Internet company. That doesn’t even include the estimated golden parachute payment of $ 54.9 million she would get if she steps down, something she says she doesn’t plan to do.
Mayer’s total haul at the company was even higher — $ 162 million — if you factor in how much the stock options she was given are worth now, according to compensation firm Equilar. Equilar says her total windfall, including a current value of her severance if she leaves, is $ 218.9 million.
Seeing the size of Mayer’s payout is a painful reminder for investors who saw the company’s revenue stagnate during her tenure, going from a profit of nearly $ 4 billion a year to losing $ 4.5 billion and paying billions for small companies that never paid off or were largely written off.
Shares of Yahoo rose 145% un- der Mayer, but that was due to factors she had little to do with, such as the rising value of the company’s stakes in Chinese ecommerce site Alibaba and Yahoo Japan, acquired long before Mayer arrived.
Yahoo’s stock price rose “because of the strategy they introduced to unlock the value of Alibaba and Yahoo Japan,” says Ali Mogharabi, analyst at Morningstar. “That’s pretty much it.”
Mayer, in her statement about the deal said, “The sale of our operating business, which effectively separates our Asian asset equity stakes, is an important step in our plan to unlock shareholder value for Yahoo.”
Although Yahoo has a market value of $ 37.4 billion, the core business was sold to Verizon for a fraction of that. Investors know the bulk of Yahoo’s value isn’t about the core business. Yahoo’s stake in Alibaba is worth roughly $ 32 billion, and its stake in Yahoo Japan was valued at $ 8.7 billion. That implies the market sees Yahoo’s core business as worthless. That masked the value of Yahoo since the core business was being discounted due to the risk of triggering a tax bill, Mogharabi says.
Mayer’s efforts couldn’t get the company back to its former glory, even with the stakes in Alibaba. At its peak in 1999, Yahoo was valued at more than $ 109 billion, or nearly triple its current value. Mayer pushed to boost mobile, video and social efforts by spending more than $ 3 billion buying or investing in more than 51 companies ranging from Flurry to Tomfoolery, according to a USA TODAY analysis of data from S& P Global Market Intelligence.
But the deal that captures the failures of the strategy was the biggest one, Yahoo’s $ 1.1 billion buy of Tumblr in May 2013. Yahoo has since written off 70% of the price it paid, Mogharabi says.
“That tells you this didn’t work out that well,” Mogharabi says.
Investors hope the Yahoo core assets will be more valuable inside Verizon, if the telecom company can be a strong competitor to Facebook and Alphabet. Verizon has “ample data about consumers, and it intends to marry this data with the data already residing at YHOO ( as well as AOL and other Internet assets) to also effect better targeting,” Shebly Seyrafi, analyst at FBN Securities, said in a note to clients.
At its peak in 1999, Yahoo was valued at more than $ 109 billion, or nearly triple its current value.