Yahoo’s board decided to rescind CEO Marissa Mayer’s cash bonus for 2016, the company revealed in a US Securities and Exchange Commission filing on Thursday, after an investigation into a 2014 security breach that compromised hundreds of millions of user accounts found that her executive team did not respond appropriately to the incident:
While significant additional security measures were implemented in response to those incidents, it appears certain senior executives did not properly comprehend or investigate, and therefore failed to act sufficiently upon, the full extent of knowledge known internally by the Company’s information security team. …
In response to the Independent Committee’s findings related to the 2014 Security Incident, the Board determined not to award to the Chief Executive Officer a cash bonus for 2016 that was otherwise expected to be paid to her. In addition, in discussions with the Board, the Chief Executive Officer offered to forgo any 2017 annual equity award given that the 2014 Security Incident occurred during her tenure and the Board accepted her offer.
In a brief post on Tumblr addressing the news, Mayer encouraged the board to redistribute her bonus among Yahoo’s workforce, but as the Washington Post’s Jena McGregor points out, that doesn’t necessarily mean they will:
How much Yahoo’s 8,500 employees will get if that that bonus is redistributed — or whether they will get higher payouts at all — is unclear. While some media outlets have said Mayer is “giving” her bonus to employees, she did not actually receive it, and only “expressed [her] desire” for that to occur. When asked whether employees will actually receive that money in the form of higher payouts or bonuses, a Yahoo spokeswoman said in an email the company was “still working on that piece” and had no further comment at this time.
The amount that could be divvied up is also unclear. The value of Mayer’s cash bonus for 2016 has not yet gotten final approval by the board’s compensation committee, according to a spokeswoman. Mayer’s 2012 employment agreement states that her target bonus is two times her salary, or $2 million, with an upper limit of four times her salary, or $4 million. In 2014, her bonus was $1.1 million[.]
As CEB’s own Brian Kropp observed when LinkedIn CEO Jeff Weiner made a similar move last year, even a bonus of several million dollars, allocated among thousands of employees, doesn’t amount to that much money per employee. Employees appreciate the unexpected windfall, but the effect on engagement doesn’t usually last, and it can create expectations of future bonuses the organization can’t necessarily meet.