Yahoo had a spectacular jump in stock price over the last one year ( nearly doubling it value). But how much of it can be attributed to the core Yahoo business? Since the new Yahoo CEO took over, the company has gone on an acquisition road with more than a dozen companies now under its belt. All the acquisitions have been made mostly to increase their target audience ( like Tumblr) or for engineering talent. But not much effort or inefficient effort has been made to reinvigorate their advertising model and hence revenues in their core products have not increased substantially.
Even the core Yahoo products of mail and news are currently mediocre. Marissa Mayer’s emphasis on redesigning these products have not yielded dividends. In fact as a long time Yahoo user, I feel that the quality of Yahoo mail has decreased. Even Microsoft is proving itself in the email department through its improved Outlook.com mail service.
Yahoo vows a lot of its market value to it stake in Alibaba. And with Alibaba’s IPO on the horizon will Yahoo sell its stake and use it for more acquisitions? If I judge Marissa Mayer’s performance over the past couple of years, I see a lot of emphasis on redefining Yahoo’s culture to be more closer to a startup. Now one cannot fault that rational since Yahoo was not performing well when she took over. But the culture of a startup is to release great products and move quickly to attract new customers. Has Yahoo achieved any of the above? The short answer is No and if that is the case what exactly has Marissa Mayer accomplished? 2 years is a long time in a CEO tenure to show performance improvements or at least a vision of higher growth or new game changing products on the horizon ( what is the use of acquiring engineering talent with no quality products to showcase). Having failed to bolster Yahoo’s growth ( 1% growth YoY is not good enough for Yahoo when competing with Google, Microsoft etc), is it justified for the Yahoo CEO to have such a huge yearly compensation (to the tune of $150m which includes stock options)? As a student of Corporate Governance, I just cannot justify this compensation model. The shareholders of Yahoo and the Board of Directors should revisit such a compensation model where the CEO is rewarded for a growth in stock price without actually playing a part in that growth.
* Maybe Yahoo should reward Alibaba’s CEO Jack Ma instead of Marissa Mayer. 🙂