Marissa Mayer is paying people mind-boggling salaries to stay at Yahoo

Marissa mayerInstagram, @victorcahuThanks for the beer, boss!

Yahoo is a troubled company with a tumultuous history.

Annual revenues aren’t growing and they haven’t for years.

It’s under siege from activist investor Jeff Smith of Starboard Ventures.

A couple of weeks ago it went through a “restructuring” that cost between 100 and 200 people their jobs.

Because of all this chaos, Yahoo can be a hard place to work.

CEO Marissa Mayer knows it, and she’s done a lot to improve the company’s culture over the past two and a half years.

You hear a lot about the free food and the new smartphones, but she has also added a lot of transparency to the company.

Still, those efforts are not enough to keep people from fleeing.

So Yahoo and Mayer tend to pay people a lot more money than they would probably make elsewhere.

For example, on Tuesday, a source close to a few Yahoo executives told us that a friend of his in the company’s ad sales group makes a stunning $US2.5 million a year.

Compensation for digital ad sales executives is “all over the place,” says this source, but $US2.5 million is “astronomical.”

His friend was making about $US450,000 before Mayer arrived.

Our source says his friend likes the job at Yahoo just fine, thank you very much.

There are a few other examples of high pay at Yahoo.

The company has hired a lot of its mobile engineers through the acquisition of failed startups. When these people join, they get $US1 million over three years. We hear that other employees sometimes get the acqui-hire package if they threaten to leave. One million dollars over three years is not an astronomical figure for engineering talent in the Valley, perhaps, but it’s definitely on the high end of the market.

Jeff Bonforte, the senior vice president in charge of Yahoo’s communication products, including the crashy Yahoo Mail, is rumoured to make something like $US5 million a year.

It is public record that former Yahoo COO Henrique de Castro made more than $US100 million for his 14 months of work at the company in 2013 and 2014.

When I was writing my book, “Marissa Mayer and the Fight to Save Yahoo!,” I learned that De Castro’s pay package was so rich that when Mayer presented it to the board, several directors wondered how he could possibly be worth the money. Mayer convinced them he knew the world of ad sales so well that the company would seriously suffer if it did not hire him.

Overpaying employees is not something Mayer brought to Yahoo. It’s a tradition at the place. The problem is, all the overpaying leads to calls for cost cutting, which leans to turmoil, which leads to poor morale, which makes it so that Yahoo has to overpay its people for them to stay.

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