Outgoing Yahoo CEO Marissa Mayer could walk away with a payout of $186 million from the organisation when she leaves, amid the internet giant’s sale to telecoms behemoth Verizon.
The sum – comprised of cash lurking in a host of different stock options – has already been cited as a reward for failure in some quarters, as Mayer’s overall tenure at the helm of Yahoo has fallen well short of expectations. After making some high-impact early moves, such as banning her staff from working from home, Mayer has done little to rehabilitate Yahoo’s status as a has-been in the household internet-brands league – with Google stealing a march thanks to its sheer size and adaptability, and more agile platforms such as Facebook proving much stickier with audiences.
If the payout goes ahead, the controversy will only swell in light of the firm’s decision earlier this year to cancel Mayer’s standard, annual bonus, following an embarrassing cybersecurity lapse that exposed the personal details of more than one billion Yahoo users: an event that almost derailed the Verizon sale.
High-profile organisations should be projecting themselves as governance exemplars – so how does that square with payouts of this size for exiting leaders who have underperformed?
“The message that should be picked up from this – and it’s a recurrent one – is that a high-paid executive must translate and articulate their worth, and explain to the workforce why they think they deserve to be paid 400 times more than the lowest-paid member of staff,” says The Institute of Leadership & Management's head of research, policy and standards, Kate Cooper. “There should be a transparency around these matters, and it should begin even before the individual joins, so that when they finally leave, everybody knows what it’s going to cost the organisation, and that’s set against clearly defined performance benchmarks.”
Cooper adds: “There’s certainly an argument to say that as performance bonuses are so complex and hard to get right – and, of course, will drive behaviour in any form – then what boards should really say to their choice leadership hires is, ‘This is what you’re worth to us – and this is what we want from you.’ By the same token, I think that some of these high-paid executives should do more to back themselves up – saying, ‘I am worth X and will deliver Y’, rather than asking for their rewards to be predicated on a host of variables, which could all be designed to leave the firm with a massive bill anyway, no matter how well they’ve done.”
In Cooper’s view, that’s not the only form of soul searching that executives of this stature should undertake. “I have to say, I’m astounded by this Yahoo payout,” she says. “There’s something unethical, and lacking in integrity, for anyone to fail to do what’s expected of them, and then think they’re entitled to a multimillion-dollar exit deal. You can talk about hubris, you can talk about the isolation of the chief exec, or the perils of that person being surrounded by people who praise them. But I think fundamentally it comes down to the moral core of that individual. That’s what we should be challenging. It’s not enough to simply say that an agreement, on paper, is legal. It’s about whether it’s right or wrong.”
For further thoughts on thinking and acting morally, check out this learning item from the Institute
Image of Yahoo data-breach notice courtesy of dennizn, via Shutterstock