Despite facts dug up by the Securities and Exchange Commission (SEC) to suggest Yahoo intentionally failed to announce two security data breaches before plans by Verizon to acquire the company, it is now clear Yahoo CEO Marissa Mayer may still earn her full $141 million as soon as acquisition deal is sealed, Fortune wrote.
The full nine-figure payment is an executive pay for salary, stock bonuses, and other performance benefits she is entitled to if Verizon eventually acquires Yahoo.
However, since SEC is trying to prove that Marissa Mayer may have been guilty of misconduct in concealing information of the two hacks Yahoo suffered from company investors and customers, government officials are looking into whether she should forfeit her proposed $141 million merger payday or receive much lesser than that under a “claw back” policy for executive pay.
The claw back policy stipulates that where a company executive engages in fraudulent behaviors that cause the company to lose money through fines and compensations to customers, that their bonuses or legal payments accruing to such company executives be forfeited or reduced to cover up for the financial losses their companies have sustained through their misconducts.
But it is doubtful whether this claw back policy will impact on Mayer’s salary and incentive-based compensations in any way – because Yahoo’s claw back policy provides that an executive will lose his pay in the case of accounting or financial fraud; what Mayer may have been accused of is hiding information regarding two data breaches.
This means even where Yahoo is fined to pay huge compensation for violating security laws, CEO Mayer may still need to keep her huge executive pay if Verizon goes ahead with the acquisition plan. Not only Mayer, other executives on Yahoo’s management team will be expected to collect their full pay in the event that Verizon still acquires the company because this is the agreement between the two companies when the idea for acquisition first came up last year.
To this extent, Mayer’s $141 million executive pay can be broken down. She currently owns Yahoo shares worth $93 million (and she could sell these for higher profit when she steps down); she is entitled to one year of salary after she leaves Yahoo and this adds up to over $3 million, including bonuses and performance benefits; and since Yahoo’s stocks closed for $42.40 on Monday, Mayer has about $45 million there for herself.
There is only one way for Mayer to lose all her severance pay – to be sacked by Yahoo management “for cause” upon proof that she actually planned the whole misconduct that led to data breach and lose of acquisition opportunity from Verizon among other imposed fines.