There Isn't Much Left of Marissa Mayer's Yahoo Golden Parachute

Key Speakers At 2015 The Fortune Global Forum

Yahoo! Chief Executive Officer Marissa Mayer speaks in San Francisco.

Photographer: David Paul Morris/Bloomberg
  • CEO would get $12.4 million in severance, equity if terminated
  • Declining share price, vesting of options have reduced value

Ousting Chief Executive Officer Marissa Mayer could cost Yahoo! Inc. about $12.4 million. Thanks to Yahoo’s declining share price and the vesting schedule of Mayer’s awards, letting her go now would be a bargain compared with 15 months ago.

Had she been terminated in December 2014, Mayer would have been able to collect $36.1 million in severance and equity awards vesting early, according to the Web portal’s proxy statement. If her termination would have come within a year of selling the company, the exit package at that time would have swelled to $157.9 million.

Firing a CEO can be a costly move for a company, with the bulk of an exit package’s value often coming from unearned equity awards that pay out on the termination. Mayer’s golden parachute has diminished because Yahoo shares slid more than 30 percent in the past 15 months. Several of her large grants of stock options and restricted shares have also vested, meaning that she owns them now.

If she’s terminated without first selling the company, Mayer is eligible to receive $3 million cash severance and benefits worth about $40,000. She’d also get stock worth at least $9.34 million as of Wednesday’s close in New York, while forfeiting about $24.4 million in equity awards due to vesting restrictions in her employment agreement, according to data compiled by Bloomberg.

Activist investor Starboard Value LP is seeking to replace the entire board at Yahoo, including Mayer, saying the company has been mismanaged and lacks leadership to serve shareholders’ best interests. Mayer, who took over in July 2012, has struggled to drive sales growth even as she’s shifted strategies and focused on adding content to attract users.