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What's Happening in the US Telecom Industry?

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Part 3
What's Happening in the US Telecom Industry? PART 3 OF 18

Why Yahoo Denied Mayer Her Bonus

Why Yahoo denied Mayer her bonus

A Yahoo internal investigation into the twin hacks the company suffered in 2013 and 2014 blamed CEO Marissa Mayer and top lawyer Ronald Bell for their poor response to the breaches. As a result, Yahoo’s board ousted Bell and denied Mayer her annual bonus. Mayer went further and also declined her annual equity bonus, which she asked the board to distribute among Yahoo employees.

Mayer’s annual equity bonus is millions of dollars, while she is eligible for an annual cash bonus of up to $2.0 million, according to the Associated Press.

Why Yahoo Denied Mayer Her Bonus

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Breaches cost Yahoo $350 million in Verizon deal

The data breaches Yahoo suffered in 2013 and 2014 have been described as the worst in Internet history. More than one billion customer accounts were believed to have been exposed in the hacks. As a result, Verizon (VZ) demanded nearly a $1.0 billion discount on the $4.8 billion price it had agreed to pay to acquire Yahoo’s media operations. Yahoo allowed Verizon a $350 million discount to prevent the deal from falling apart.

Holding executives responsible

It is unclear whether Mayer not remaining with Altaba nor transitioning to Verizon is tied to her punishment for her inadequate response to the embarrassing data breaches. However, punishing Mayer and Bell for Yahoo’s twin hacks seem to offer lessons on how boards can push executives to do more to protect investor interests. Data breaches not only dent a corporation’s image, but they also expose it to lawsuits and regulatory actions that can cost a company a substantial amount of money that could otherwise be distributed to shareholders or reinvested in growth.

For Verizon, though, the hacking crisis has created an opportunity for it to get its hands on Yahoo at a discount as it pushes into the media business to cope with fierce competition from AT&T (T), T-Mobile (TMUS), and Sprint (S). But its media push is certainly not welcome from media incumbents such as Comcast (CMCSA).

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