Yahoo CEO Marissa Mayer, following the closing of the Verizon acquisition of the internet company’s operating businesses, will get a golden parachute package worth around $23 million if she’s fired or leaves for good cause within a year, Yahoo disclosed in a regulatory filing Monday.
The company also disclosed that Verizon CEO Lowell McAdam in February had said on a conference call with Yahoo that “a purchase price reduction as high as $925 million could be appropriate” following Yahoo’s disclosure of two massive user-data breaches that occurred in 2013 and 2014. Verizon and Yahoo subsequently agreed to shave $350 million from the purchase price for Yahoo’s internet businesses, to about $4.48 billion, because of the hacks.
In a separate filing, Yahoo on Monday said Thomas McInerney, formerly CFO of Barry Diller’s IAC, will take over as CEO of the company following the Verizon deal closing, which is expected sometime in Q2. At that point, the company will change its name to Altaba Inc., with its major assets comprising shares of Alibaba Group.
In order for Mayer to get the severance following the Verizon sale closing, she must be “terminated without cause” or she must leave terminate her agreement “for good reason” within one year of the change in control, according to the Yahoo filing.
Yahoo previously had said that Mayer would resign from the company’s board following the closing of the Verizon deal. She is expected to join Verizon for at least an interim period while Yahoo and AOL teams are combined.
In addition, CFO Ken Goldman is set to be replaced by Alexi Wellman, who has been VP and global controller of Yahoo since October 2015. Until the Verizon deal closes, Mayer will continue to serve as CEO and Goldman will continue to be CFO.
Yahoo also said that on March 10 it appointed Arthur Chong to serve as general counsel. The former top lawyer at Broadcom had served as an outside legal adviser to Yahoo from October 2016 until March 9. Former Yahoo general counsel Ron Bell resigned earlier this month in the wake of the disclosure last year of the security breaches.
If Mayer is terminated or departs for good cause as CEO, she would receive $3 million in cash, $20 million in equity, and $25,000 in continuing medical-coverage benefits, according to the Yahoo SEC filing. That’s less than the $55 million payout Yahoo had last May estimated Mayer would be entitled to in the event of her termination with a sale of the company, because of stock options and awards that have vested in her account since then. Mayer held stock and and options worth $76.8 million as of March 8, 2017, per Yahoo’s SEC filing.
The severance packages that Mayer and other outgoing Yahoo execs would receive are “in connection with the Sale Transaction, assuming that the Sale Transaction were consummated and each executive officer experienced a qualifying termination on March 8, 2017 (which is the assumed closing date of the Sale Transaction solely for purposes of this transaction-related compensation disclosure),” the company said in the filing.
Under their severance agreements, chief revenue officer Lisa Utzschneider would receive $16.5 million (including $14.7 million in equity) and Goldman would receive $9.5 million (including $7.8 million in equity). Former general counsel Bell is receiving no payments in conjunction with the sale to Verizon.
Earlier this month, Yahoo’s board said it would not pay an annual bonus to Mayer for 2016 — citing the user-data breaches that happened on her watch — and that she offered to forgo any 2017 annual equity award.
McInerney, who has been a member of Yahoo’s board since April 2012, had also served as CEO of IAC’s retailing division (which included HSN and Cornerstone Brands) as well as CFO of Ticketmaster. He currently serves on the boards of directors of HSN, Interval Leisure Group and Match Group.
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