I created a simple spreadsheet tabulating the sales and purchases and published it online. It quickly drew the attention of the media, which primarily focused on how new CEO Carol Bartz has sold almost $2 million in stock in her first five months on the job.
Since then, Bartz denied that she sold anything -- once on CNBC and once at the New York press event at which she launched Yahoo!'s new $100 million marketing campaign.
These sales were not open-market sales but related to the vesting of restricted stock units (RSUs) Bartz received from Yahoo! in 2009 as part of a $10 million "makeup grant" designed to compensate her for options she left on the table when she left her part-time executive chairman role at Autodesk(ADSK Quote) to take the helm at Yahoo! in January.
Bartz's initial tactical response to the criticism about the stock sales seems to have been: "Damn the filings, I'm going to deny, deny, deny." Perhaps she thought that if she denied it forcefully enough, the issue would just go away.
Yahoo!'s public relations team has taken a more nuanced approach. In response to questions from the Guardian and CNBC about the issue, they explained that the sales were due to taxes Bartz owed on the vested stock. Therefore, they suggested, these weren't "real" stock sales and were no cause for alarm for investors.
These responses fail to address the real issue, though. I've never said these are open-market sales, although they certainly qualify as sales (as the SEC filings show). And I have criticized Bartz for not digging into her own pocket to pay the taxes owed on the vested stock instead of selling parts of those stock grants to do so. Obviously, I can understand why more junior employees choose to sell vested stock to pay their taxes, but senior executives like Bartz have the money to easily cover their tax bills. I'm assuming Bartz thinks her actions as CEO can help Yahoo!'s stock go up in the future. In order to show her confidence in her own leadership -- and in Yahoo! stock -- she should pay the taxes herself and keep all of her vested shares.
Last week, I highlighted in a blog post that Bartz sold another $1.3 million at the end of September, again selling some of those third-quarter vested shares that were part of her "makeup grant" in order to pay her taxes.
Yahoo!'s public relations team objected to this latest post from me, calling my assertions on this and Bartz's other sales "inaccurate and misleading." They pointed out Bartz didn't make an open-market sale. I never said she did. They noted that Bartz's "makeup grant" was previously disclosed. That's what I said in my prior criticisms. They stated that the company "currently" withholds a portion of vested stock in order to pay taxes for "all" employees receiving vested stock because it is "practical" and added that "many companies" do the same. As I've said before, if Carol Bartz wanted to pay her taxes on this vested stock so she could keep all the Yahoo! stock possible, would some human relations bureaucrat at the company have told her no?
As a follow-up, Yahoo!'s public relations team was asked to point to the previously disclosed filing showing that Bartz was required by Yahoo! not to pay taxes herself on the vested stock she received from the company as part of her "makeup grant." In response, Yahoo! pointed to the company's 10-K filing made last February and specifically referred to exhibit 10.17(D) in that filing.
The exhibit lays out the specific terms of the employment agreement that Carol Bartz negotiated with the company relating to stock grants she is to receive. Indeed, the exhibit states that Yahoo! will withhold some of the vested stock to pay Bartz's taxes. However, that same section goes on to say that "[i]n the event the Company cannot (under applicable legal, regulatory, listing or other requirements) satisfy such tax withholding obligation in such method", Yahoo! might have to require Bartz to "pay such amount in cash or check."
There's nothing in this exhibit that says Bartz couldn't pay her own tax bill herself on the grant if she wanted to, in order to keep all her vested stock. Indeed, it's interesting that Exhibit 10.2(F) in the same filing, which refers to situations where all employees (not just Bartz) exercise their stock options and owe taxes, says Yahoo! requires them to pay the tax bill. This can be done by selling a portion of their exercised stock options or paying "cash or check" out of their own pocket. This latter option is exactly what I argued Bartz should have done -- from a leadership perspective -- with respect to her "makeup grant."
My comments about Bartz' stock sales and her egregious pay package, which was approved by Yahoo!'s compensation committee in January, have been neither inaccurate nor misleading. From a shareholder's perspective, Bartz shouldn't have sold these shares in order to pay taxes on them. To demonstrate her belief in the long-term value of the shares, she should have paid the tax bill herself.
The group deserving the most blame in this compensation debate is, of course, Yahoo!'s compensation committee, which signed off on Bartz's employment contract. The committee is chaired by Art Kern and has members Ron Burkle and Frank Biondi, Carl Icahn's right-hand man. They should be ashamed of the following aspects of Bartz's employment agreement:
A majority of Yahoo!'s board deserves to be replaced for so poorly negotiating the potential buyout of the company by Microsoft. All of the members of the compensation committee deserve to be replaced for overpaying Bartz's predecessor, Terry Semel, and for approving Bartz's contract.
But let's be clear: Bartz is no babe in the woods. She's been around the block negotiating employment contracts and knew exactly what she was demanding. Her compensation, perks and tax gross-up demands are excessive. She should immediately pay back Yahoo! shareholders the $140,000 for the high-priced advisers she used to negotiate her employment contract. She should also show her shareholders and employees that her heart is in the right place when it comes to this company's future.
To that end, I call on Bartz to spend $25 million of her own aftertax income on open-market Yahoo! stock purchases. She can keep her $187 million for getting the stock back to a 20% discount to the Microsoft offer, but let's see her put some of her money where her mouth is -- and actually at risk.
-- Written by Eric Jackson in Naples, Fla.
At the time of publication, Jackson's fund had a long position in MSFT.
Eric Jackson is founder and president of Ironfire Capital and the general partner and investment manager of Ironfire Capital US Fund LP and Ironfire Capital International Fund, Ltd.
As predicted last month, when I first raised this issue, Yahoo! disclosed late Friday that Carol Bartz had sold another $1.3 million of Yahoo! stock at the end of September. This brings her total Yahoo! share sales for the year to $3.3 million.
When I first brought up this issue of how she and several other Yahoo! insiders had dumped shares over the past 2 years, Bartz went on CNBC and flat-out denied that she'd sold any shares.
She later reaffirmed at the press conference announcing Yahoo!'s new $100 million marketing campaign ("It's about Y!ou") that she'd never sold any shares.
I don't understand why she has decided to take this strident denial approach, when her SEC filings clearly show she disposed of (i.e., sold) her shares.
These sales all have to do with a "Make-Up Grant" Yahoo!'s board gave to Carol as part of her employment agreement she signed with the company. They agreed to give her $10 million worth of cash and Restricted Stock Units (basically Yahoo! shares) in blocks each quarter for her first year (2009) on the job to make her whole for the Autodesk stock she left on the table to take the Yahoo! CEO job.
No one has ever explained why Yahoo!'s board decided to give her a $10 million "make-up grant" when, according to SEC filings, she was only leaving Autodesk stock and stock options worth $3.3 million at the time she signed the deal.
Every quarter, when Carol gets her cash and stock from Yahoo! for this inflated "Make-Up Grant," she owes taxes on it. What is unusual about Carol compared to other senior executives who have been well-compensated through the years is that, rather than pay her tax bill herself, she has decided to dump part of her Yahoo! shares every quarter to pay those bills.
If I was an employee or shareholder, I would be disappointed that Bartz didn't want to keep every single share of Yahoo! stock she possibly could -- because I would think she anticipates that the price is going to go through the roof in the months and years to come.
How do I know Carol has enough cash in the bank to pay these tax bills herself? In 2007 alone, she exercised options at Autodesk worth $47 million. That's just that one year. Of course, she has enough.
It comes down to a question of leadership. When she had the choice to demonstrate her desire to keep all the Yahoo! stock that she negotiated so hard to get, she decided that she would rather keep her existing cash in the bank, than keep a few more hundred thousand shares of Yahoo! And then, to go on about how she never sold stock, and get Yahoo! PR to say this is done all the time -- when it's not, by real leaders -- that's bush league.
After founding eBay in September 1995 and overseeing all aspects of the business for the first three years, Pierre Omidyar decided he had a tiger by the tail and needed some professional management. He hired Meg Whitman, a Harvard MBA with stints at Bain, Hasbro(HAS Quote), FTD, Walt Disney(DIS Quote), Procter & Gamble(PG Quote) and Stride Rite, as CEO in March 1998. The company went public six months later and has been a runaway success.
eBay is an incredible entrepreneurial story. Omidyar and his first employee, Jeff Skoll, deserve countless wealth for creating a multibillion dollar company from nothing. Along the way, Skoll -- who no longer holds any eBay stock -- cashed out equity worth $5.3 billion. Omidyar, still chairman, has cashed out about $3.5 billion to date, but his remaining equity stake is worth another $3.8 billion at current market prices. He now lives in Hawaii and is a philanthropist. And with as much wealth as they've created for themselves, Omidyar and Skoll have created more for others and should be celebrated for this success.
Whitman, who stepped down as CEO last year and now has ambitions to become governor in California in 2010, had a net positive record overseeing eBay. She rode a rocket ship of growth -- getting through the early days of frequent Web site crashes -- and ultimately got it to be a $60 billion company in late 2004; it's about half that valuation today.
Yet Whitman's final years at eBay leave her open to criticism. She promoted a drunken-sailor approach to acquisitions, always overpaying and making little effort to stitch them together. A culmination was the $4.1 billion purchase of Skype in 2005 (including all payouts), in which she took an auction and e-commerce site into the phone business.
Potentially more damaging in the long-run for eBay than overpaying was that Whitman didn't get the intellectual property associated with Skype. This has allowed Skype's founders to now come back and sue eBay for trying to unload the property recently at a valuation of $2.75 billion.
Although Whitman hasn't done as well as Omidyar and Skoll, she's been well-compensated for her time as CEO. According to filings with the Securities and Exchange Commission, Whitman was paid $47 million in total compensation between 1998 and 2008. Additionally, she sold eBay stock during that time worth about $732 million. She still owns stock in the company as of the end of last year worth another $500 million at today's valuation, as well as additional stock options that will have renewed value if eBay's stock gets above $31.
I believe Whitman deserves every nickel of compensation and stock sale proceeds she got between her joining the company in 1998 and Jan. 1, 2005. Since then, however, eBay has been in a tailspin with the stock down 59% vs. a Nasdaq decline of 3% over the same period. eBay's new CEO John Donahoe was hand-picked by Whitman because he used to work with her at Bain. He has spent the first two years on the job trying to give the company some sense of focus and direction, which it lacked under his predecessor.
Something happened in Whitman's last four years on the job in which her pay became dramatically disconnected with eBay's stock price and her perks started to go through the roof.
Based on my review of the company's SEC proxy filings, it appears that there were two big clues for investors that suggested, between 2005 and 2008, Whitman's interest had drifted away from increasing the stock price of eBay to increasing her cash compensation and perks. Had anyone seen these clues -- and, interestingly, perhaps Skoll did as he liquidated his entire eBay stake in 2006 -- they might have pulled the ripcord on owning the stock in 2006 or 2007 when it was trading at $35, before the bottom fell out in the stock and it hit its nadir below $10 this past March.
The first big clue that Whitman's eye was no longer on the ball as CEO had to do with her total annual compensation spiking in the last two full years of her tenure, even as eBay's stock price continued to decline. Peaking at $58 at the start of 2005, eBay's stock price dropped 43% over the next three years. Over that same period, Whitman's total annual compensation almost quintupled to $13.9 million from $2.9 million.
Meg Whitman's Total Annual Compensation | ||
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SEC Filings | ||
At the end of 2002, Schultz left eBay's board and compensation committee. He was replaced by Tom Tierney. Tierney was formerly the CEO of Bain Consulting and, indirectly, Whitman's old boss. Tierney would pass any stock exchange definition of an "independent" director. But for those of us who live in the real world, it is obvious that Whitman had a new friend on the small group deciding how she would be paid.
It should come as no surprise then that this committee immediately started loosening the purse strings, and for the years 2003 to 2007, just before she resigned, Whitman's total annual compensation averaged $7.6 million.
The second big clue that Whitman was no longer as focused on eBay's fortunes in her final four years as CEO was the amount of time she spent flying around the world on personal business in eBay's corporate jet, which was paid for by eBay shareholders.
As the chart below illustrates, eBay's compensation committee (again perhaps indirectly linked to Tierney's arrival) went from a practice of not granting Whitman any personal air travel on the corporate jet paid by the shareholders to almost $1 million a year in her final two full years on the job.
That $1 million includes tax gross-ups, meaning shareholders also paid Whitman's taxes on the benefit she received of making all those flights instead of the billionaire paying her taxes herself. These two years of lavish perks coincided with a time when eBay's stock dropped 22%, even though Nasdaq was up 17% in the same period.
| Meg Whitman's Personal Aircraft Costs Paid by EBAY Shareholders | ||
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SEC filings | ||
I don't follow California politics -- although I'm a fervent supporter of free market capitalism as advocated by Milton Friedman -- but I find it highly ironic and disingenuous of Whitman to portray herself now as a populist based on her time at eBay. According to a glowing Fortune profile of her political ambitions last March, the only "dirt" her critics have been able to dig up on her is that she voted in only half the elections for which she was eligible in the last decade. She explained it this way: "I was head down, building eBay, with two teenage sons and a neurosurgeon husband, and traveling half the time."
She was certainly traveling half the time -- for personal vacation jaunts, all paid by eBay shareholders.
In the last two years, perhaps self-conscious at just how embarrassing these numbers were, eBay decided to break up the personal air travel perks into two categories: purely personal travel and travel to outside board meetings. Whitman was on the boards of Procter & Gamble and DreamWorks Animation (DWA Quote) in the last two years of her tenure. So some of her million-dollar expense went to shuttling her to L.A. and Cincinnati several times a year for these meetings.
I can understand why eBay burnished Whitman's personal network to serve on those boards and rub shoulders with Steven Spielberg and other luminaries, but how did serving on those boards help eBay shareholders? They say that While Rome burned, Nero fiddled. At eBay in 2006, while the stock dropped and the Skype merger was a mess, Whitman flew to Hawaii and other locales on a private jet paid for from the shareholders' bank account.
So, a question to the
Most troubling about this "CEO entitlement mentality" that Whitman adopted in her final years on the job is that she's passed the habit on to her successor. Donahoe racked up almost $280,000 worth of personal aircraft expenses in his first nine months on the job in 2008. I can't wait to see what he can do this year with a full 12 months.
I doubt he's ever had to answer to why he's indulging himself in this ridiculous expense. If asked, I suspect he'd look blankly ahead and say something like, "Well, Meg said it was OK."
It's time for eBay to grow up and stamp out these excesses. Just because you've always done something dumb doesn't mean you should keep doing it. Make your well-compensated execs pay their own way on personal trips using the corporate jet, and start linking pay for performance. Donahoe made $13.1 million last year for his nine months as CEO, while eBay's stock dropped 55%, far wider than Nasdaq's 30% loss in that same period.
eBay's board, particularly its compensation committee, needs to turn the page on the Meg Whitman era and get its executives focused on the tough task at hand in turning around the company instead of worrying about their next tee time.
-- Written by Eric Jackson in Naples, Fla.
t the time of publication, Jackson had no positions in the stocks mentioned.
Eric Jackson is founder and president of Ironfire Capital and the general partner and investment manager of Ironfire Capital US Fund LP and Ironfire Capital International Fund, Ltd.
It's good to be CEO, even in a recession. Especially in a recession.
Hewlett-Packard's stock price fell 29 percent in 2008, and the company announced plans to lay off 25,000 workers after it acquired Electronic Data Systems. But CEO Mark Hurd didn't feel the pain. Hurd earned $43 million in 2008, a 73 percent raise from his 2007 pay. Perks included $136,000 worth of personal travel on corporate jets, paid for by shareholders, and $7,472 in travel expenses for Hurd's family, according to an analysis of HP's annual proxy filings by shareholder activist Eric Jackson. Several other top HP executives earning multimillion-dollar pay got double- or triple-digit raises.
[See 10 gaffes by doomed CEOs.]
Hurd has been a strong CEO since he took over in 2005, generally credited with enhancing HP's profitability after a period of drift. But the big pay hikes during a dismal year are generating some of the toughest criticism of Hurd's tenure. "There are some very troubling aspects about how he, his management team and his board approach executive compensation and governance," writes Jackson. "Investors should steer clear of this Silicon Valley icon until it gets its act together."
For all the talk of reining in CEO pay and enacting financial reform—even from some CEOs themselves—it's beginning to appear that very little has changed in the way companies are run and executives get paid. A new survey of CEO pay by research firm the Corporate Library finds that median take-home pay among more than 2,000 CEOs fell by 6.4 percent from 2007 to 2008, the first time on record that CEO pay has gone down instead of up. But that was in a year in which the stock market fell by 37 percent and the economy lost 2.6 million jobs. By almost every measure, the vast majority of companies performed far worse in 2008 than in 2007. "While the downturn has affected pay, the link between pay and performance remains weak," says the report. "Such a minimal decline in pay given the massive decline in shareholder value is hardly an adequate response."
A surprising number of CEOs didn't personally experience the downturn at all. Of 100 industries tracked by the Corporate Library, median CEO pay went up in 40. The 10 highest-paid CEOs included seven from the oil industry, which had a banner year as gasoline prices hit $4 per gallon. The others were Stephen Schwarzman of the Blackstone Group, Larry Ellison of Oracle, and Michael Jeffries of Abercrombie & Fitch. Schwarzman earned the most: $702 million. No. 10 Jeffries earned $72 million.
[See how to pay CEOs what they're worth.]
Reformers want to see much tougher rules linking executive pay to the long-term performance of their companies, and a few CEOs took a step in this direction. Lloyd Blankfein of Goldman Sachs endured a 97 percent pay cut in 2008, because the tony Wall Street firm rescinded bonuses for top executives. Jamie Dimon of JPMorgan Chase went without a bonus as well, resulting in a 92 percent pay cut. But both of those companies were big bailout recipients under the microscope of politicians and regulators. And both have paid back all their bailout money, which means Blankfein and Dimon will probably do a bit better in 2009.
[Get ready for the miraculous hollow economy!]
It's likely that overall CEO pay will bounce right back up in 2009 as well. Many CEOs earn a relatively low base salary, with the majority of their total compensation coming from bonuses, company stock, or options to buy stock. The plunge in the stock market last year means the value of CEO-owned stock fell as well, and many CEOs declined to exercise options to sell stock since prices were so low. That has changed in 2009, with the market up smartly. It could even turn out to be a record year for CEO pay raises, as they springboard off of last year's lows. At least somebody's getting ahead.
09/16/09 - 07:00 AM EDT
By Eric Jackson
In last week's Activist column, we shined a spotlight on the large amount of insider selling which has occurred at Yahoo! in the past two years (based on our study of the Securities and Exchange Commission filings leading to other media reports on this topic), including Bartz dumping $2 million in shares in March and June.
Since that column appeared, Bartz, Yahoo!'s PR SWAT team and Bartz' defenders have claimed that there was "no story here," as these were "routine" share sales made to pay taxes on generous Restricted Stock Unit (RSU) grants. Bartz went so far as to say "I didn't sell anything" on television and there have also been vague references to her shares being "reacquired" again. They have not - as the actual Form 4 SEC filings show. They state only "disposals" of $2 million in Yahoo! shares, which of course immediately lower the company's earnings per share.
Contrary to what any PR flak says, these kinds of tax-related share dumps when RSUs vest may be common at lower levels of the company, but they are not at the highest level, where executives have more than ample means to pay their taxes out of their own pockets. Bartz made $45 million in 2007 alone just from exercising her Autodesk(ADSK Quote) options, so she could have easily scratched together $2 million to pay the tax man if she'd wanted to hold on to her Yahoo! shares.
It turns out that, when you start to peel the onion around Bartz' CEO employment contract, there are many interesting details which Bartz would likely not want discussed. Prior to negotiating with Yahoo! for the top job, Bartz hired an unnamed financial advisory firm to help her. Later, when the deal was done, she got Yahoo!'s board to agree to Yahoo!'s shareholders paying "up to $150,000 for advisory fees" for her use of that savvy firm (which is outrageous and she should immediately reimburse Yahoo! shareholders for that with interest).
That negotiated agreement is a good one for Bartz, as this analysis shows. Making reasonably conservative assumptions, Bartz should get $187 million for her planned four years of work at Yahoo!
One small part of that agreement is something Yahoo! calls the "Make-Up Grant." Because of "forfeiture of the value of equity grants and post-employment medical coverage from" leaving her old executive chairman job at AutoDesk, which has one-fourth of the market cap of Yahoo!, Yahoo!'s board said she was due $10 million.
As part of that grant, she'll get $2.5 million in cash this year and 639,386 RSUs (or shares). The cash and shares vest at a rate of 25% quarterly in 2009. By the end of this year, those shares and cash will be worth about $12.5 million (not the $10 million grant date fair value; see this breakdown for more detail .
Yahoo! states later that they are providing "post-employment medical coverage for Bartz, her spouse and eligible dependents" on top of her grant, so that should not be linked to the value of the "Make-Up Grant." Therefore, the only thing to be made up for is the value of her unexercised AutoDesk equity options.
Yet when you go back and review the unexercised options she possessed in the 2008 AutoDesk proxy statement and the ones she subsequently exercised and sold in share sales through the rest of last year, I calculate Bartz' value of her unexercised equity grants at far less than $10 million.
On the date her Yahoo! employment agreement was announced (Jan. 15, 2009), AutoDesk was trading at $16.14. That means, her remaining 250,912 $11 strike price, her 36,420 $8 strike price, and her 993,056 $14.40 strike price unexercised options had a fair value on the date she took the Yahoo! top job of $3.3 million -- not $10mm.
This major "Make-Up Grant" discrepancy between what Yahoo! chose to award Bartz and what it appears -- according to her AutoDesk SEC filings -- she was in fact walking away from should be explained to shareholders immediately.
Setting this problem aside, Bartz -- like any other employee who gets RSUs -- has to pay tax on stock grants whenever she receives them. To pay the tax, Bartz must make a choice to write a check to the government from her personal account to cover this or sell part of these Yahoo! shares from the RSUs. In the first and second quarters, Bartz sold $2 million in Yahoo! stock to pay her taxes. It's very likely she'll do this again later this month and in December, when the rest of her "Make-Up Grant" shares vest.
Which brings us to the core problem: given her leadership role at Yahoo! and given her generous Yahoo! compensation and sizable wealth she's amassed from her time at AutoDesk, why would she dump Yahoo! shares instead of paying her tax bill herself? It sends the wrong message to employees and shareholders that she wouldn't be kicking and screaming to keep every last Yahoo! share in her possession.
I think there's a simple answer to this question: Carol Bartz is used to getting generous tax gross-ups from companies she works for and likely she (or her high-priced advisors) negotiated this in as part of the deal.
A tax gross-up is when an executive wants to receive a certain amount of compensation award or benefit but knows they'll have to pay taxes on it. Rather than pay that tax bill themselves, the executive asks the company to bump up the value of the award in the amount of any taxes they would otherwise have to pay. They end up getting the amount of money they want tax-free -- with taxes paid for by the company's shareholders rather than the executive.
For an example, let's go back to the 2008 AutoDesk proxy statement : "During fiscal 2007, Ms. Bartz's other compensation included post-employment health and dental benefits with an actuarially determined present value of $631,986 plus a $421,324 tax gross-up, and a Company gift for appreciation of years of service as CEO costing $67,500 plus an associated $33,889 tax gross-up." Have you ever heard of a gross-up on a gift for years of service?
Tax gross-ups are completely unacceptable and any well-governed company doesn't allow them. If you make money or a benefit of some kind, you should pay tax on that -- not the shareholders who gave you the benefit in the first place. To use one of Bartz' favorite words, tax gross-ups are stupid.
Bartz has clearly become used to tax gross-ups at AutoDesk and likely she or her high-priced advisors were thinking of this "Make-Up Grant" in the same way. They might have negotiated her $3.3mm fair value (as of mid-January 2009) unexercised AutoDesk options into a $10mm make-whole grant from Yahoo! That's a tax gross-up and then some.
Yahoo!'s compensation committee is to blame here. First, they pay Terry Semel over $570 million for his six years as CEO; then, they award Bartz a four-year $187 million pay package with up to $30 million in year one; then, they see their ineffective incentive plans lead to Yahoo! insiders selling $233 million in stock over the past two years versus insider purchases of only $103,000. Now, we learn of these discrepancies in the reasoning for different elements of Bartz' pay.
Where is Carl Icahn in all this? It turns out he was right at the negotiating table when all this went down. His colleague, Frank Biondi, has served on Yahoo!'s compensation committee since joining the board in September 2008. He directly oversaw the design and approval of Bartz' pay plan, which, in my view, wasn't in the shareholders' interests.
Of course, Bartz is at fault here too. She's gotten too used to high pay and tax gross-ups over the past few years -- both for herself and for CEOs she has socializes with.
Examine this table below for a comparison between the average annual total compensation for several popular tech CEOs vs. ones in Bartz' social network. Bartz doesn't suffer fools -- or CEOs who don't bank a lot of coin.
| Popular Tech CEOs | |
| CEO | Most Recent Avg. Annual Total Compensation |
| Eric Schmidt, Google | $500,000 |
| Jeff Bezos, Amazon.com | $1.3mm |
| Steve Ballmer, Microsoft | $1.3mm |
| Steve Jobs, Apple | $1 |
| Carol Bartz' Network of CEOs by Employment or Directorship | |
| CEO | Most Recent Avg. Annual Total Compensation |
| John Chambers, Cisco | $11mm |
| Paul Otellini, Intel | $12mm |
| Dan Warmenhoven (Ex-CEO), NetApp | $5.7mm |
| Carl Bass, AutoDesk | $7mm |
| Carol Bartz (when Executive Chairman), AutoDesk | $4.5mm |
Eric Jackson is founder and president of Ironfire Capital and the general partner and investment manager of Ironfire Capital US Fund LP and Ironfire Capital International Fund, Ltd.
Sphere: Related ContentAnalysis of total compensation Carol Bartz is eligible to make between 2009 - 2013, as CEO of Yahoo! All data taken from SEC filings made by the company in January and February 2009. This compensation plan was approved by Yahoo!'s compensation committee consisting of Chair Arthur Kern, Ron Burkle and Carl Icahn's representative Frank Biondi.
If reasonable and max targets are hit, she should receive total comp of $29mm for the year 2009 and $187mm for the years 2009 - 2013 inclusive.
Carol Bartz' Total Compensation Plan as Yahoo! CEO
Bobbie Johnson of the Guardian wrote a balanced post below on the topic of Carol Bartz's $10mm Year One signing bonus.
I think the crux of it was the point he made about Bartz’ decision to use Yahoo shareholders’ money to pay her tax bill instead of her own accumulated wealth.
If she truly believed in the long-term opportunity of YHOO shares, why sell 200,000+ of her total "signing bonus" grant of 600,000+ shares for coming over from Autodesk to pay the taxman? If she paid instead with her nestegg money (which I assume would be substantial enough to cover it), she would still hold all those 600,000 shares from the grant at the end of 2009 – with all the upside that she’s presumably going to help her people produce as part of "her" turnaround.
Instead, she decided not to dip into her pocket. She dipped into Yahoo!’s pocket. And whose pocket is that? Roy Bostock’s nestegg? Ron Burkle’s nestegg? No, the shareholders’.
I don’t disagree with the InsiderScore guy who says “this is common practice.” Yet, does that make it right?
Frankly, I don’t know why more people don’t get more incensed at this "back the truck up" upfront compensation. Why couldn't Yahoo!'s comp committee have structured a back-end loaded deal, with Carol making lots after shareholders did (with clawbacks to boot)? Maybe the topic of executive compensation is too esoteric and people gloss over when talking about RSUs and vesting options.
Bartz is walking down a well-travelled road that many other insiders have figured out. She's not the first to structure deals this way -- and won't be the last. And it’s certainly not an easy problem (exec comp) to fix. Yet it should be debated.
Let's hope some in the media pick up on this and ask some tough questions, rather than fearing they'll lose access to ticked off executives.
