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Yahoo CEO Gets 23 Million Severance for Running It into the Ditch PDF Print E-mail
Tuesday, 14 March 2017 12:00

Marissa Mayer will not be CEO of remaining pieces of Yahoo that aren't being sold to Verizon, the company said Monday in a regulatory filing.

Mayer is set to get $23 million as part of her "golden parachute" agreement with Yahoo, which kicks in once Verizon completes its acquisition of the company's core internet assets like Yahoo Mail and Yahoo Finance, according to a filing with the Securities and Exchange Commission. The severance will consist of $3 million in cash and $20 million stock.

Yahoo confirmed in the filing that Mayer will cease to be CEO of what remains of Yahoo after Verizon buys its core Internet assets. But that shouldn't come as much of a surprise based on multiple mis-steps and huge security breaches that nearly got swept under the rug.

Yahoo's Description of the Sale

In connection with the execution of the Stock Purchase Agreement, Yahoo and Yahoo Holdings have entered into the Reorganization Agreement, dated as of July 23, 2016 (the "Original Reorganization Agreement"), as amended by the Amendment to Reorganization Agreement, dated as of February 20, 2017 (the "Reorganization Agreement Amendment" and, together with the Original Reorganization Agreement, the "Reorganization Agreement"), pursuant to which Yahoo will transfer to Yahoo Holdings prior to the completion of the transactions contemplated by the Stock Purchase Agreement all of the assets and liabilities of the Business, other than specified excluded assets, which include Yahoo's cash and marketable debt securities as of the closing, Yahoo's shares in Alibaba Group Holding Limited ("Alibaba") (held directly and indirectly), Yahoo's shares in Yahoo Japan Corporation ("Yahoo Japan"), certain other minority equity investments, and all of the equity of Excalibur IP, LLC ("Excalibur"), which owns a portfolio of patent assets that are not core to Yahoo's operating business (the "Excalibur IP Assets"), and specified retained liabilities, which include any outstanding 0.00% Convertible Senior Notes due 2018 issued by Yahoo (the "Convertible Notes"), security holder litigation, 50 percent of certain post-closing cash liabilities related to certain data security incidents referred to in the Reorganization Agreement Amendment (the "User Security Matters") and certain other data breaches incurred by Yahoo (collectively, the "Data Breaches"), and certain director and officer indemnification obligations. We refer to such transfer, together with the sale of all of the outstanding shares of Yahoo Holdings to Verizon and the Foreign Sale Transaction, as the "Sale Transaction."

Specifically, under the Stock Purchase Agreement, we have agreed to sell to Verizon all of the outstanding shares of Yahoo Holdings, Inc., a wholly-owned subsidiary of Yahoo, which we refer to as Yahoo Holdings, and prior to the sale of Yahoo Holdings to cause Yahoo Holdings to sell to a foreign subsidiary of Verizon all of the equity interests in a newly formed foreign subsidiary of Yahoo Holdings that will hold certain foreign subsidiaries relating to Yahoo's operating business, following the transfer to Yahoo Holdings of all of the assets and liabilities relating to our operating business, other than specified excluded assets and retained liabilities, as set forth in the Reorganization Agreement, dated as of July 23, 2016, as amended as of February 20, 2017, between Yahoo and Yahoo Holdings, which, together with the Stock Purchase Agreement, we refer to as the sale transaction agreements. The purchase price that Verizon will pay or cause to be paid in the sale transaction is $4,475,800,000 in cash, subject to certain adjustments.

Note that liabilities are being transferred to "foreign subsidiaries". Some people might infer that this could limit litigation damages which would normally occur in the US.

After the deal closes, all that remains of Yahoo will effectively be an investment company for its Alibaba holdings. That company will be renamed Altaba and Mayer will be replaced as CEO by Yahoo board member Thomas McInerney.

The new company formed out of Yahoo, Altaba, will be led by CEO Thomas J. McInerney, the former CFO of IAC. Yahoo's CFO Ken Goldman will also step down after the sale closes. He'll be replaced by Alexi Wellman. Wellman is currently Yahoo's global controller.

Following the completion of the Sale Transaction, the Company will continue to be a Delaware corporation publicly traded on Nasdaq, but will be renamed "Altaba Inc." and trade under the ticker symbol "AABA." Because the Company's assets will then consist primarily of equity investments, short-term debt investments, and cash, the Company will be required to register as an investment company under the Investment Company Act of 1940 (the "1940 Act"). An investment company is a company that is engaged primarily in the business of investing, reinvesting, or trading in securities. Investment companies are regulated by and subject to certain restrictions and requirements under the 1940 Act to which the Company is not currently subject. These restrictions and requirements relate to, among other things, transactions involving affiliates, the composition of the Company's board of directors, the Company's capital structure, compliance policies and procedures, valuation of assets, and the maintenance of investment policies. The principal business of the Company after the Sale Transaction will be to hold investments in Alibaba and Yahoo Japan stock, although the Company will also own certain minority investments, marketable debt securities, and all of the equity interests in Excalibur, a wholly-owned subsidiary of the Company that owns the Excalibur IP Assets. The Company currently intends to seek to sell its minority investments over time, to liquidate marketable debt securities not needed for cash management purposes and, after completion of the Sale Transaction, to sell or license some or all of the Excalibur IP Assets.

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