Why Is Yahoo’s New CEO Making Twice as Much as Marissa Mayer?

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Last week, Yahoo spinoff Altaba named Thomas McInerney as its new CEO. McInerney, who is a board member and the former CFO of media company IAC, will earn $2 million annually in base pay. That’s twice as much as soon-to-be-former CEO Marissa Mayer earned.

NBC News notes that “Mayer isn’t going entirely gently into the good night, she’ll get a $23 million golden parachute, as well as around $57 million in stock options.”

However, given that Yahoo sold the bulk of its business to Verizon — for a reduced rate, following a massive data breach — and that Altaba is essentially just the company’s stake in Chinese internet retailer Alibaba, how can McInerney’s role call for twice Mayer’s pay?

The CEO Who Was Supposed to Save Yahoo

When Mayer was named CEO of Yahoo in 2012, she took over leadership of a company that was struggling to find its place in the modern tech landscape. Yahoo had helped pioneer user-friendly internet in the 1990s, but fell behind as giants like Google, Facebook, and Twitter rolled out new search tools and ways of connecting.

Prior to leading Yahoo, Mayer worked at Google, first as a software engineer on projects like Gmail, Google News, and Google Images, and eventually as an executive, heading up search at the company. With her appointment at Yahoo, she became its seventh CEO in five years.

The challenges facing Mayer were steep, but critics argue that she squandered opportunities.

“When Yahoo hired Mayer, the company was in a position to become a real player in social media, and to blossom into a much bigger digital-media property that could leverage increased revenue from its huge audience,” writes Todd Spangler at Variety. “Instead, Mayer spent $1 billion on blogging startup Tumblr, which three years later hasn’t produced any meaningful revenue, while unilaterally abandoning an array of content initiatives.”

Spangler also notes that Mayer’s focus on improving Yahoo search was unsuccessful — not a huge surprise, given that “web search hadn’t been a strength since the company’s earliest days.”

Others say that perhaps no CEO could have saved Yahoo.

“It’s only fair to repeat that Yahoo may have been beyond saving when Mayer took the helm,” writes Michael Hiltzik at The Chicago Tribune. “So it’s not proper to say that she ran it into the ground, as some critics assert; it’s only fair to say that she didn’t do much, if anything, to extend its glide path to extinction. Keeping a high-flying company aloft through multiple changes in technology, economics and social habits is a herculean challenge that has been met by precious few CEOs in history.”

The Glass Cliff

Regardless of your feelings about Mayer’s leadership of Yahoo, it’s worth noting that women are more likely to be fired from CEO roles at large companies than men.

At Bloomberg View, Leonid Bershidsky writes about a 2014 study on corporate leadership transitions, saying:

To be exact: Over the past 10 years, 38 percent of female chief executives of the world’s 2,500 biggest public companies were fired, compared to 27 percent of their male counterparts.

This is not evidence of male superiority on the job, but of the so-called glass cliff theory. According to this, women and other “occupational minorities,” such as people with a different skin color, tend to get appointed to top jobs when a company needs saving. When these women fail — and in a crisis, the probability of failure is higher — boardrooms fall back on tradition. They replace the women with white men who have lots of industry experience.

Yahoo’s transition would certainly seem to fit that pattern.

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