> The letter was in response to a New York Times report that Android creator Andy Rubin received a $90m exit package despite facing misconduct allegations.
Woah, holy shit, a $90M exit package? It's like Bighead in the Silicon Valley TV show, except 4.5x more. The writers for that show picked a crazy number and reality comes along and over-quadruples it. Granted, Bighead did not create Android, or anything, in the TV show. But an severance package of that size is still absolutely ridiculous.
I have a suspicion that corporate executives are Veblen goods [1], which makes their price/wage behavior somewhat economically counterintuitive. When a company's board hires a new CEO, the primary return to the individual director who puts forth the candidate is in social status. They want to be seen as having made a bold, risky move, and having the social connections to pull it off and get their candidate approved. (The idea that the board acts to maximize shareholder value is a legal fiction only; people make decisions, not laws, and unless the shareholders can bring a successful shareholder lawsuit the individual people will make the decision that maximizes their own personal utility.) That means that the more a candidate already makes, and the higher their profile in the business world, the more they can command in compensation. On the way out, all participants are again motivated by status - a lengthy wrongful termination lawsuit damages the reputations of everyone involved, and so all parties have an incentive to spend more shareholder money to avoid it.
The executive that's considered to be most responsible for all the corruption in Well's Fargo received a 125M$ retirement package. The world is just generally amazingly unjust.
I'm agnostic on whether or not Marissa had any fault in Yahoo's demise. I worked with her at Google and actually have a fair amount of respect for her as an executive.
However, as Steve Jobs once said [1], somewhere between janitor and VP reasons cease to matter, and results are all that matter. And the fact is that she was hired to turn around Yahoo as an operating web property, but by the time Verizon bought it, Wall Street was valuing Yahoo's operations (less its Alibaba holdings, which Jerry Yang bought in 2005) as negative.
I'm pointing out that there's a certain irony that even when executives get fired for not doing the job that they're supposed to do, they still get paid nearly as much as if they had actually done that job. A board that's actually trying to maximize shareholder value might pay a lot for an executive, but would structure their compensation deal so they only get that payout if they actually succeed at the job they're hired to do.
Why not, even if Marissa Mayer managed to moderately slow the decline of a major company, the fact that it still collapsed certainly isn't the sort of deliverable that justifies 260M$.
I believe Yahoo was in real trouble when Marissa Mayer was hired and there are some decisions she made that were clearly wrong in hindsight. I don't feel qualified to judge her performance in detail but 260M$ is a glowing endorsement which seems entirely disconnected from the reality of what happened during her tenure.
There is an article out there that talks about her repeatedly being hours late for meetings with major CEOs. There were lots of other negatives. It made her sound like a first class train wreck.
If the article is factual she was compensated $260M for turning in a performance that could have gotten a minimum wage grocery bagger fired several times each month.
This is just a demonstration of the different worlds we live in. There are countless examples of CEOs getting sacked for gross mismanagement and then rehired in a new executive role. Unlike other time periods it's easier (not easy) for people to enter that strata of society but once you're in it seems like you're set for life and the worst that can happen is you get setup with a cushy job with generous paycheck to basically not cause any more trouble.
She arguably had a small chance of success; it was probably the posing as a picture-perfect CEO and bringing her clueless friends to highest levels of the company while scaling down employee-friendly policies that made her more enemies that she deserved.
Your forgetting option C which is what everyone is pissed about:
C) getting paid $260M to take over Yahoo as it was "running into the ground" despite her not turning it around from "running into the ground".
Why should they pay her $260M for not changing the overall outcome of the company? They could have hired just about anyone for a miniscule fraction of the price and seen the same outcome.
How long is the recipient required to hold them before they can be sold?
If you receive a large pile of stock/options which you can immediately begin selling off then the long term prospects for the company are largely irrelevant to you.
It's in stock, but so is the $90M that Andy Rubin received.
Also, IIRC the Yahoo purchase was a stock swap for Verizon shares. Those are publicly traded, so she can always liquidate her holdings at whatever the current VZ price is.
Sure, but if you're terminated for cause you shouldn't receive anything. The $90 million was for Google to keep the story quiet and to keep Rubin from working for a competitor.
"Sure, but if you're terminated for cause you shouldn't receive anything."
This assumes that, for example, when he became an SVP, he was still on any sort of standard employee agreement.
That is highly unlikely.
Almost all execs at that level in that large a company would have a specially negotiated agreement. Most still end up with something even if terminated for cause.
Almost all their exits would be specifically negotiated mutual separation agreements.
(I'm not defending the above, obviously, just explaining what i expect is the case based on experience)
Also worth pointing out: don't know when he was made SVP/etc, but it probably predates any pushes to change any of this in tech. :(
I did a key-person contract negotiation after my last company was sold, and I over-spent on legal for it (20/20 hindsight everything would have worked out peachy for me had I just blind-signed what the acquirer gave me) and it was not my experience that compensation after termination for cause was a market ask. My lawyer, for whom I was very small fish indeed, suggested that I could probably ask for anything I wanted short of any kind of severance or acceleration on termination for cause.
You know more about the market in the Valley than I do, but I am surprised to hear the suggestion that anyone at the SVP level would have negotiated severance on for-cause termination.
(The point you made subsequently, about him maybe having locked in some amount of comp in exchange for non-compete, makes more sense.)
Again you know this stuff way more than I do. I'm just sort of probing here.
You will see that for example, these sample clauses (which are not uncommon) say nothing about morals except conviction of a crime of moral turpitude.
Sometimes they say stuff about code of conduct violations, etc.
But that's a fuzzier area (particularly since most companies revise their codes of conduct constantly).
> Google could have fired Mr. Rubin and paid him little to nothing on the way out. Instead, the company handed him a $90 million exit package, paid in installments of about $2 million a month for four years, said two people with knowledge of the terms.
However I don't know if that's just opinion or based on some set of facts about his situation.
My wife works in HR (not at Google, but in tech and other industries), and has handled things like executive compensation/retention/etc. She has done many of these types of situations over the years.
She was doubtful they would have been able to pay him nothing.
I've also seen a bunch fly by on the legal side over the years, and most (but not all) that i've seen would have paid out something in a case like this.
Best guess as to the 90 million was that it was not about this, but stock payout in exchange for not competing with google for a while or something.
> Sure, but if you're terminated for cause you shouldn't receive anything.
I disagree. It all depends on what the cause is. Regarding sexual harassment which today means any woman can accuse you of that and no questions is asked and you'll get sacked is not a valid reason for not getting any money imo.
> Sure, but if you're terminated for cause you shouldn't receive anything.
But Rubin probably wasn't terminated for cause, but nudged to resign.
> The $90 million was for Google to keep the story quiet and to keep Rubin from working for a competitor.
The $90 million was probably to prevent a protracted legal battle Google wasn't guaranteed to win; senior executives typically have fairly strong exit guarantees in individual contracts; people talk about it being hard to fire people under union contracts, but doing so under executive contracts (without paying the pre-negotiated severance and adhering to the likely-present mutual non-disparagement clause) is at least as difficult.
How would they attract a similarly capable person in the future if they withdrew generous compensation? It's like when secret service withdraws protection offer after they received the information they were after; they wouldn't ever recruit anyone in that area again.
Not at all. Reread it please. It's about attracting highest technical/management caliber employees able to create $XBn projects from the scratch. If you showcase that you dispose of such employees after they finished their job with no reward because of tangential factors, other people might not want to join you in the future, because who knows what actually happened, if there e.g. wasn't a team inside collecting potentially damaging information about their employees to be used when company wanted to save money after their usefulness expired, or if somebody wasn't playing another Game of Thrones, manipulating easily impressionable people and their opinions to keep the money. Who can tell what exactly the truth was? E.g. it's highly unlikely just one side is right if two people end up in the same hotel room alone; believing that would insult intelligence of everyone...
This is not about Essentials (flop) but about Android (huge success). Would you like to be paid for your most successful project based off your worst one? Of course without Google Andy would not be successful, but the same could have been the other way round - without Andy Google might not have had Android and Nokia would be still popular smartphone king...
Being terminated for cause shouldn't retroactively makes you un-earn money. If for the sake of argument the money was for developing android, then he would deserve both the pile of money and punishment for wrongdoing.
Woah, holy shit, a $90M exit package? It's like Bighead in the Silicon Valley TV show, except 4.5x more. The writers for that show picked a crazy number and reality comes along and over-quadruples it. Granted, Bighead did not create Android, or anything, in the TV show. But an severance package of that size is still absolutely ridiculous.