Wednesday, January 14, 2009
What is it about human nature that so many people lead to go for the negative right away? Carol Bartz' appointment to CEO of Yahoo is new news - hot off the press - and the Reuters news title is New Yahoo CEO lacks Web and deal-making chops. They do credit her business skills but go straight to her lack of Internet experience and that she has a history of doing small and medium deals - implying she doesn't have the chops for Microsoft.
Frankly, I think Carol's a great pick for Yahoo. I agree 100% with what she's quoted as saying "I just see this company as a company with enormous assets that frankly could use a little management, and I love leading, love managing, love making decisions," she said.
Carol is direct, smart and a fast decision maker. She'll surround herself with people who know the market and she'll quickly make decisions on what needs to happen. Just good management skills, decision making skills and a high IQ - a combination that doesn't show up often enough in CEOs and is essential to turn an opportunity like Yahoo around.
I'm thrilled for her, for Yahoo and for the Valley tech community.
Carol's compensation is also set up very well - a win-win for her and the investors. She has a salary typical for the market - $1M is right in line for a company of Yahoo's size, cash bonus of 2X at target, again not that unusual, but her options vest based on her raising and sustaining the stock price which is a win for investors and employees.
From the SEC filing:
The Agreement provides that Bartz will receive an annual base salary of $1,000,000, subject to annual review for increases, and will be eligible to receive an annual bonus with a target amount of 200% of base salary and a maximum amount of two times the target amount. The actual amount of the annual bonus will be determined by the Compensation Committee of the Board (the “Compensation Committee”) based upon both the Company’s and Bartz’s performance for the relevant year.
In addition, Bartz will receive stock options (the “Inducement Options”) for 5,000,000 shares of the Company’s common stock (“Common Stock”), with a per share exercise price equal to the closing price of the Common Stock on the grant date (expected to be January 30, 2009) and a maximum term of seven years.
Vesting of the option will be dependent upon the attainment of average closing prices for the Common Stock for twenty consecutive trading days prior to January 1, 2013 (or, if a Change in Control occurs prior to January 1, 2013 or after that date if it is pursuant to an agreement signed before that date, the price immediately preceding the closing of the Change in Control) as follows: (i) 1/3 (1,666,667 shares) will vest at 150% of the exercise price; (ii) 1/6 (833,333 shares) will vest at 175% of the exercise price; (iii) 1/6 (833,334 shares) will vest at 200% of the exercise price; (iv) 1/12 (416,666 shares) will vest at 225% of the exercise price; (v) 1/12 (416,666 shares) will vest at 250% of the exercise price; and (vi) 1/6 (833,334 shares) will vest at 300% of the exercise price (the “Vesting Levels”). Any shares acquired upon exercise of the Inducement Options must be held until January 1, 2013, except in the event of death or a Change in Control.
Bartz will also be granted annual equity grants at the time grants are generally made to senior executives as determined by the Compensation Committee. She will receive an annual grant for 2009 with a value of approximately $8,000,000 which is expected to be granted in February 2009.
Bartz will be eligible to participate in the benefit programs generally available to senior executives of the Company, including health insurance, life and disability insurance, the Employee Stock Purchase Plan, 401(k) plan, and a Flexible Spending Plan. She will be entitled to four weeks of vacation per year. The Company will also pay or reimburse her for reasonable expenses incurred in connection with her employment, including up to $150,000 for advisory fees incurred in connection with entering into the Agreement.
In addition, to compensate Bartz for the forfeiture of the value of equity grants and post-employment medical coverage from her previous employer, the Agreement provides for an equity grant with a grant-date value of $10,000,000, payable 25% in cash and 75% in restricted stock, which will vest and be settled in equal and proportionate quarterly installments in 2009 (the “Make-Up Grant”). The Make-Up Grant will be subject to certain clawback provisions in the event of a termination for Cause or without Good Reason during the Term. The Company will also provide post employment medical coverage under its plans to Bartz, her spouse and eligible dependants as necessary, with Bartz paying the full premiums.