Bartz's Pay Package Egregious: Activist

Bartz has clearly become used to tax gross-ups at AutoDesk, and it's likely she or her high-priced advisers were thinking of this "Make-Up Grant" in the same way. They might have negotiated her $3.3 million fair value (as of mid-January 2009) unexercised AutoDesk options into a $10 million make-whole grant from Yahoo! That's a tax gross-up and then some.

Yahoo!'s compensation committee is to blame here. First, the company pays Terry Semel over $570 million for his six years as CEO; then, it awards Bartz a four-year, $187 million pay package with up to $30 million in year one; then, the company sees its ineffective incentive plans lead to Yahoo! insiders selling $233 million in stock over the past two years vs. insider purchases of only $103,000. Now, we learn of these discrepancies in the reasoning for different elements of Bartz's pay.

Where is Carl Icahn in all this? It turns out he was right at the negotiating table when all this went down. His colleague, Frank Biondi, has served on Yahoo!'s compensation committee since joining the board in September 2008. He directly oversaw the design and approval of Bartz's pay plan, which, in my view, wasn't in the shareholders' interests.

Of course, Bartz is at fault here, too. She's gotten too used to high pay and tax gross-ups over the past few years -- both for herself and for CEOs she has socializes with.

Examine this table below for a comparison between the average annual total compensation for several popular tech CEOs vs. ones in Bartz's social network. Bartz doesn't suffer fools -- or CEOs who don't bank a lot of coin.

Popular Tech CEOs CEO Most Recent Avg. Annual Total Compensation Eric Schmidt, Google $500,000 Jeff Bezos, Amazon.com $1.3mm Steve Ballmer, Microsoft $1.3mm Steve Jobs, Apple $1 Carol Bartz' Network of CEOs by Employment or Directorship CEO Most Recent Avg. Annual Total Compensation John Chambers, Cisco $11mm Paul Otellini, Intel $12mm Dan Warmenhoven (Ex-CEO), NetApp $5.7mm Carl Bass, AutoDesk $7mm Carol Bartz (when Executive Chairman), AutoDesk $4.5mm Source: Company proxy statement SEC filings