On Thursday, Yahoo! (YHOO) shareholders will vote on whether or not to approve Verizon's (VZ) acquisition of the company's core internet business. If the deal is approved as expected, it will mark the end of Marissa Mayer's five-year tenure as CEO of Yahoo!. Here are 11 key moments from her eventful run at the top of the company.
1. Yahoo! Names Mayer C.E.O.
In the summer of 2012, Marissa Mayer left Alphabet's Google (GOOGL) to take the helm of Yahoo! after activist shareholder Daniel Loeb pushed out Yahoo!'s former CEO and backed her for the job. Mayer left quite the legacy at Google. Having come aboard during the company's infancy in 1999, she was responsible for its Maps & Locations Services, including Google Maps, Google Earth and Zagat. She was also credited for developing the "look and feel" of Google's user experience, managing such products as Gmail and the Google search bar.
Mayer's reputation as an innovator gave shareholders hope for the struggling Yahoo! The company had experienced four turnovers in leadership in less than a year, and earlier in 2012, a series of layoffs resulted in a 14% depletion of staff. Mayer, shareholders believed, would restore stability as well as a focus on consumers to the company. Yahoo! released a statement on the day of her appointment, stating that the move signaled a "renewed focus on product innovation to drive user experience and advertising revenue."
Nearly a year after Mayer's appointment, Yahoo! shelled out $1.1 billion to acquire the popular multimedia/social networking website Tumblr. The deal was seen as a bold business move by Mayer to tap into Tumblr's younger audience, despite the fact that the website generated little revenue. In a statement released on the day of the acquisition, Mayer promised "not to screw it up," and kept Tumblr CEO David Karp aboard as a sign of good faith.
In the years since the acquisition, though, Yahoo! has twice written down the price of Tumblr. As of last summer, the market valuation of Tumblr stands at about a third of the $1.1 billion that Yahoo! paid. Perhaps this particular business venture was an omen for Yahoo!'s tumble from grace.
In September 2014, China's biggest e-commerce company announced its initial public offering, priced at $68 a share or $21.8 billion. It was the largest global IPO of all time, and left Yahoo! shareholders feeling pretty good. The company owned a 22.6% stake in Alibaba (BABA) at the time, thanks to a savvy $1 billion investment made back in 2005. Yahoo! had to sell 140 million of its shares in the IPO, which resulted in a $9.4 billion windfall for the company. Not bad, considering Yahoo! held $4.3 billion in cash before the IPO and retained a 16% stake in Alibaba, worth $40 billion, after it.
The activist investor Starboard Value LP, led by its C.E.O. Jeffrey Smith, bought a significant ownership stake in Yahoo! a week after the Alibaba IPO. In a letter accompanying the purchase, Smith urged Mayer to merge with AOL, sell Yahoo!'s stakes in Alibaba and Yahoo! Japan, and stop acquiring startups in order to get the company back on track. Mayer did not heed Smith's advice, and AOL was acquired by Verizon in June 2015. Once Verizon's purchase of Yahoo! is approved, Smith will finally get his wish-- Verizon plans to combine Yahoo! and AOL into a new company called Oath.
In January 2015, Mayer outlined a plan to spin the company's $40 billion stake in Alibaba to shareholders. This was a tax-friendly way to manage the stake--had Yahoo! sold its shares outright, it would have had to pay $16 billion in tax returns. The shares would instead be spun off with its small operating business into a new vehicle called Aabaco Holdings, which would funnel $40 billion into shareholders' pockets. Mayer touted her strategy in an investor call: "Assuming Monday's value of Alibaba post-spin, we will have returned nearly $50 billion of value to our shareholders," she said. "This level of return is historic."
However, the best-laid plans can often go awry, and by December 2015 the plan for Aabaco Holdings had been scrapped. The company had difficulty making the business venture tax-free, and worried that the market's perception of tax risk would deflate the value of Alibaba shares. Instead of paying the $10 billion in taxes that the spin-off of Alibaba would have entailed, Yahoo! announced plans to try to monetize its 35.5% stake in Yahoo! Japan.
In February 2016, Yahoo! announced it had hired financial advisers to help re-work the company's strategy. Goldman Sachs (GS) , JPMorgan Chase (JPM) and PJT Partners would advise on finance, while a strategic review committee would reach out to potential bidders for Yahoo!'s core business. The formation of this counsel followed Mayer's announcement of a $400-million cost-cutting plan that would reduce the company's staff by 15%, which may have been the straw that broke the camel's back for shareholders.
In late July of 2016, Yahoo! found a suitable buyer for its core assets. Verizon shelled out $4.8 billion in cash to acquire Yahoo!'s operations, which would be merged with AOL to create an online media and advertising technology giant. The sale effectively separated Yahoo!'s core business from its Asian asset equity stakes, which would be packaged into a new company called Altbaba. Mayer declared the Verizon deal an opportunity for Yahoo! "to build further distribution and accelerate our work in mobile, video, native advertising and social."
Two short months after the Verizon deal was announced, disaster struck for Yahoo! Chief Information Security Officer Bob Lord sent out a letter to Yahoo! users in late September 2016 warning that user account information had been stolen from the company's network. "The account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords (the vast majority with bcrypt) and, in some cases, encrypted or unencrypted security questions and answers," Lord admitted. Yahoo! believed that 500 million user accounts had been stolen in the hack. The controversy, arising in the midst of an important sale, could not have come at a worse time for the company. Or so it was believed, until...
In December 2016 Yahoo! disclosed another embarrassing hack. This one had occurred in August 2013, and was believed to be distinct from the previously announced hack. The company announced that more than one billion user accounts had been affected. Critics were quick to point to Mayer's foot-dragging in the security sector: the company had been slow to institute strong security measures, even as rivals Google and Facebook (FB) had invested heavily in safeguarding user information. The two hacks cast an unflattering spotlight upon both Yahoo! and Mayer, and caused much hand-wringing over the Verizon deal.
In February 2017, two months after the second hack was revealed, Verizon and Yahoo! struck a new deal. The former company would now only pay $4.48 billion for the latter one, which represented a $350 million markdown from the original deal. SEC filings would later show that Verizon had sought a nearly $1 billion reduction in the wake of the hacking controversy, so this was likely the best-case scenario for Yahoo!
In March 2017, it was reported that Mayer would leave Yahoo! following the Verizon merger, and that her severance, as specified in SEC filings, would include a "golden parachute" of $3 million in cash and $20 million in stock. This money out the door would come on top of the roughly $900,000 per week that Mayer had earned over the course of her tenure as C.E.O.
Whether or not Mayer earned this huge sum is open to interpretation. On the one hand, the ill-fated acquisition of Tumblr happened under Mayer's watch, as did the two major hacks. But then again, most analysts expected the company to take a larger haircut for the hacking controversy, and Yahoo!'s stock price more than tripled during Mayer's tenure. One thing is for certain--the C.E.O. leaves behind a complicated legacy, perhaps befitting the volatile reputation of Yahoo! itself.
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