Photo: Yodel Anecdotal
Scott Thompson cut a highly favourable deal for himself when he signed on as Yahoo’s CEO—so favourable that he’s already taken home $7 million that may well be his to keep, even if he’s fired over the “inadvertent error” in his résumé that made its way into SEC filings.Hey, he’s a smart guy, computer-science degree or not.
The same SEC filings that incorrectly attributed a computer-science degree to Thompson also show just how skilled a negotiator he is.
When Thompson agreed to take the thankless job of Yahoo CEO, the board approved a deal in which he would receive the following:
- $1 million in annual salary
- $2 million in target bonus, with a $1 million guarantee for 2012
- $11 million in stock options and restricted stock units vesting over three years
- An additional $5 million in stock options and restricted stock units as an “inducement grant”
He’ll lose much of that if he’s terminated for cause—and lying on your résumé is cause at most companies. If the board forces him to resign, or terminates him without cause, he’ll get six months of accelerated vesting, according to Yahoo’s standard severance terms for executives.
Regardless, Thompson already has walked away with millions from Yahoo shareholders.
That’s because Thompson negotiated a “make-whole” bonus to compensate him for the cash and equity he walked away from when he left his job as president of eBay’s PayPal unit. That included:
- $1.5 million in cash
- $5.5 million in restricted stock units which vested on March 15, 2012
- $1 million in restricted stock units which will vest on March 15, 2013
Those awards have clawback provisions which would let the company reclaim those amounts—but only if Thompson quits, not if he’s fired. Chris Crawford, chief operating officer of Longnecker & Associates, a Houston, Texas-based compensation-consulting firm, said it will be hard for the board to reclaim those sums.
“He’s got it,” said Crawford. “They’re going to have to go get it.”
Because Thompson’s restricted stock units have vested, he owes tax on them—and that alone will make any attempts to claw them back complicated, according to Crawford.
Bottom line: “The board has their hands full.”
A Yahoo spokeswoman did not immediately respond to a phone call and email requesting comment on the terms of Thompson’s employment agreement.
So does Thompson.
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