Yahoo dangled a US$27 million pay package to lure new Yahoo chief executive Scott Thompson away from PayPal.
The struggling Internet company disclosed the details of Thompson’s compensation in a regulatory filing late on Friday. Thompson starts his new job tomorrow after spending the past four years running eBay Inc’s PayPal service, where revenue more than doubled during his tenure. PayPal took in an estimated US$4.4 billion last year.
That kind of robust growth is a fuzzy memory for Yahoo Inc, a one-time Internet star whose revenue has sagged as online advertising flowed increasingly to rivals Google Inc and Facebook.
Yahoo has promised better times under three new chief executives in less than five years, only to frustrate investors each time. They have been especially disenchanted since the company squandered an opportunity to sell itself to Microsoft Corp for US$47.5 billion, or US$33 per share, in May 2008. The stock has not traded above US$20 in more than three years, with the shares closing on Friday at US$15.52. The last time it closed above US$33 was 2006.
Thompson, 54, is highly regarded in Internet circles, although some analysts question whether he is the right fit for Yahoo because he has no experience in online content or advertising, the firm’s lifeblood.
Yahoo offered Thompson a deal that includes a US$1 million salary and a bonus of up to US$2 million this year. Yahoo is guaranteeing to pay him US$1 million of the bonus; the remaining US$1 million will hinge on Yahoo’s financial results.
Thompson will also receive stock incentives valued at US$22.5 million. The stock awards could be worth more or less, depending how Yahoo’s long-slumping shares fare under Thompson’s leadership.
To top it off, Yahoo is paying Thompson US$1.5 million to offset money he forfeited by leaving PayPal. A US$6.5 million chunk of the stock awards are also meant to offset some of the compensation Thompson would have gotten at PayPal, according to the filing.
Thompson received a US$10.4 million compensation package at PayPal in 2010. It included a US$645,000 salary. EBay has not yet revealed how much it paid Thompson last year.
Unless more money and stock is added later in the year, Yahoo will not be paying Thompson as much as former Yahoo chief executive Carol Bartz, who was hired three years ago and fired four months ago. Yahoo chief financial officer Tim Morse has been running Yahoo since Bartz’s ouster.
Bartz’s compensation package during her first year on the job was valued at US$47.2 million. Much of that, though, included stock incentives that are not as valuable as the original calculations envisioned.