Marissa Mayer severance package will blow your mind

Over at yahoo sharehholders are starting to get nervous about thecompany’s future.

According to a report by The New York Times, Yahoo’s directors ended three days of deliberations Friday without announcing whether they will proceed with plans to spin off its $31 billion of stock in the Chinese e-commerce company Alibaba or adopt an activist shareholder’s recommendation to spin off or sell Yahoo’s core business, or do something else entirely.

In January, Yahoo’s chief executive, Marissa Mayer, announced that Yahoo would spin off its 15 per cent stake in Alibaba and a small-business services unit into a new company. In July, it was announced that the spinoff would be called Aabaco. Mayer, who was hired in 2012, planned to focus her attention on Yahoo’s struggling business of selling advertising shown to users of its apps and websites.

But the Aabaco transaction, which is supposed to be completed by the end of January 2016, has run into some unexpected snags. First, the Internal Revenue Service declined to say whether it would seek to collect capital gains taxes on the transaction, which Yahoo intended to be tax-free.

Then in October, the executive in charge of the deal, Jacqueline Reses, quit Yahoo to join Square, a digital commerce company. Last month, Starboard Value, a hedge fund that had pressed Yahoo to do the Alibaba spinoff, changed its mind and urged the board to sell the underperforming core business instead.

Through it all, Yahoo’s business has flatlined, lagging fast-growing peers like Google and Facebook.

Marissa Mayer

Marissa Mayer severance dead

So far, the board has stuck by Mayer, who would receive a severance package of $158 million if Yahoo were sold and her job was terminated.

A majority of the nine-member board was chosen by her, including Charles Schwab, founder of the brokerage firm that bears his name; H. Lee Scott Jr., former chief executive of Walmart, where Mayer sits on the board; and Max Levchin, an entrepreneur who worked with her at Google.

It has been up to Maynard Webb, a former eBay executive who is the board chair, to manage the deliberations.

If Yahoo intends to complete the Aabaco spinoff in January as promised, it needs to announce its plans by early next week to meet the disclosure requirements for some of its bonds, according to Robert Peck, an analyst with SunTrust Robinson Humphrey.

Through a spokesperson, Webb declined to comment about board discussions. A Yahoo spokesperson also declined to comment on Friday.

Mayer, a former Google executive who inspired hopes of a Yahoo revival, has failed to deliver any meaningful improvement in its business. Revenue is flat, and many of her new initiatives have yielded disappointing results.

Many on Wall Street have lost patience and say change is needed.

“Clearly the best outcome for shareholders would be for Yahoo’s board to immediately abandon the spin and commence a competitive process to sell its valuable core business at the highest price possible,” Starboard said in a statement Thursday.