Yahoo chief executive Marissa Mayer has made repeat appearances on the list of highest paid CEOs. The millions she could take home if she and Yahoo were ever to part ways has been the subject of much attention.
But following a board inquiry into her executive team's handling of epic data breaches in 2014, she'll be taking a sizable pay cut. In Yahoo's annual report filed Wednesday, the company said it would not award Mayer her cash bonus for 2016 “that was otherwise expected to be paid to her” — as well as that it accepted Mayer's offer to forgo her annual equity award. Mayer's target bonus, which is dependent on performance, is $2 million, while her employment agreement says she will get no less than $12 million in stock awards each year.
Yahoo also said its general counsel and secretary, Ronald S. Bell, would be leaving the company, and would receive no payments in connection with his departure.
The board's investigation concluded that some senior executives and members of its legal and IT staff knew of the hack in 2014 but “did not properly comprehend or investigate, and therefore failed to act sufficiently upon, the full extent of knowledge,” Yahoo said in the filing. While they took “certain remedial actions,” they should have done more, noting the probe “found that failures in communication, management, inquiry and internal reporting contributed to the lack of proper comprehension and handling” of the massive security breach. The board's probe “did not conclude that there was an intentional suppression of relevant information.”
In a statement, Mayer said she only learned that a large number of user files had been stolen in September 2016. “However, I am the CEO of the company and since this incident happened during my tenure,” she said, “I have agreed to forgo my annual bonus and my annual equity grant this year and have expressed my desire that my bonus be redistributed to our company's hardworking employees, who contributed so much to Yahoo's success in 2016.”
How much Yahoo's 8,500 employees will get if that that bonus is redistributed — or whether they will get higher payouts at all — is unclear. While some media outlets have said Mayer is “giving” her bonus to employees, she did not actually receive it, and only “expressed [her] desire” for that to occur. When asked whether employees will actually receive that money in the form of higher payouts or bonuses, a Yahoo spokeswoman said in an email the company was “still working on that piece” and had no further comment at this time.
The amount that could be divvied up is also unclear. The value of Mayer's cash bonus for 2016 has not yet gotten final approval by the board's compensation committee, according to a spokeswoman. Mayer's 2012 employment agreement states that her target bonus is two times her salary, or $2 million, with an upper limit of four times her salary, or $4 million. In 2014, her bonus was $1.1 million, according to company fillings, a small portion of the value of her overall compensation, which is made up largely of equity awards and was valued at $42.1 million that year. (Like all executive compensation tallies, that number is based on accounting figures; Mayer's vested actual realized pay was just 60 percent of that number in 2014.)
This isn't the first time Mayer won't receive a cash incentive bonus. Last year, the company said in its proxy statement that before the board made a decision, Yahoo's highest paid executives “requested that they not be considered for a bonus” for 2015 because growth did not meet expectations. Therefore, the value of Mayer's cash incentive bonus for 2015 was zero.