Marissa Mayer to Get $55 Million Severance Package From Struggling Yahoo!

Yahoo CEO Marissa Mayer

Marissa Mayer, current Yahoo CEO, stands to get a $55 million severance package should she loses her job because of the sale of Yahoo’s internet business. The payout was revealed in a regulatory filing that was disclosed on Friday. The severance package consists of various items which include cash, stock awards, and other benefits that she stands to get if she is removed in the case of Yahoo’s sale within a year.

The Yahoo! Inc. (NASDAQ:YHOO) board is still evaluating and deciding on the takeover bids that were submitted, most investors are confident and have been betting that the company will sell its Internet business which consists of the hugely popular email service, sport focused and financed focused Internet sections.

Marissa Mayer, a former Google executive, has for the past four years tried without success to turn around Yahoo business fortunes. Unfortunately for her, Yahoo’s downfall has even increased during her reign, which has made her pay package a sensitive issue for investors. Eric Jackson, a managing director of SpringOwl Asset Management, one of Yahoo’s shareholder’s who has been critical of Mayer’s leadership said he felt the current administration was undeserving of the high pay package it was receiving.

Yahoo refused to comment on the issue when they filed the regulatory filing with the Securities Exchange Commission. The filed documents, however, did not mention how the severance package would be given out to Marissa Mayer and some of the Yahoo executives. Under the SEC’s rules, Ms. Mayer is said to have received a compensation package which was valued at $36 million last year alone, while Yahoo’s board mentioned in their filing that it was only worth about $14 million as of April 1.

Any chances of the sale going forward were heightened last week when one of the most vocal investors supporting the sale of the Yahoo core business and outspoken critic for of Ms. Mayer, Starboard Value, reached an agreement with Yahoo. The agreement also allows for the Starboard Value CEO, Jeffrey Smith to sit as one of three Yahoo directors on the special committee that is assessing the bids for the Sunnyvale, California-based company’s internet business.

Most experts estimate that the firm will be sold in two months time at a price range from anywhere between $4 billion and $10 billion. RBC Capital Markets analyst Mark Mahaney believes the Verizon Communications will be the likely winner of the bidding competition. Verizon recently bought up AOL Inc. for $4.4 billion, and now they are eyeing Yahoo as its next target.

Speculation has therefore been rife as to what will happen when Verizon buys Yahoo. The AOL CEO Tim Armstrong is said to be one of the main people who Verizon will turn to take over the Yahoo leadership role and shove aside Marissa Mayer. Armstrong was also a top advertising executive at around the same time Mayer was busy with some of the Google products that made the search giant the giant is now.

Investors are mainly pushing for the company to be sold because it has failed so far to reach some of the targets set. Ms. Mayer’s inability to boost the company’s ad sales at a period when digitally advertising is the in thing is baffling to the investors. For example last year, investors set a revenue target of $4.6 billion, something which the company failed to do only managing $4.1 billion in revenue. For this year, the company expects a revenue drop of 15 percent which would fall to $3.5 billion.

Ms. Mayer has put to plan a cost-cutting initiative which is aimed at removing 15 percent of the company’s workforce l, as they aim to boost profits in light of continuous revenue drops. Yahoo’s stock closed at $36.60, which is more than double its value from July 2012 when the company hired Mayer. The rise cannot be entirely attributed to Ms. Mayer however but to the Yahoo’s stake in Alibaba Group, China’s leading e-commerce leader. The stake was bought before she was hired.