Saturday, July 21, 2012

Would Marissa Mayer do it for less?

Yahoo's board of directors recently named Marissa Mayer as the new chief executive of the iconic company that's a dominant Internet player.

Yahoo will pay Ms. Mayer about $70 million in salary, bonuses, restricted stock and stock options over the next five years.

She comes to Yahoo from Google, where she was that legendary company's first female engineer and one of its earliest employees. She did well at Google—her current net worth is estimated at $300 million.

Now, I cheer Marissa Mayer's personal and professional success. Clearly, she brings a lot to the table as Yahoo's new leader.

But what were Yahoo's board and the compensation committee thinking?

Assume that, on average, she's going to work a 60-hour week, 52 weeks a year, for the next five years. Some weeks she'll work more, some weeks next to nothing if she's smart enough to take a real vacation now and then.

That amounts to 15,600 hours over five years, and for that kind of workload, Yahoo's directors agreed to pay her $4,487 AN HOUR for the next five years.

Assume Ms. Mayer is going to do an unbelievably good job.

Would she do it for $4,000 an hour? Or $3,000 an hour?

What would she do differently, or less well, for, oh, let's say, $2,500 an hour?

And what other competing company was offering her anything close to $70 million?

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