Yahoo! (YHOO) has a market capitalization over $30 billion.
That sounds like a lot. It's more than double Twitter (TWTR). More than HP (HPQ) and HP Enterprise (HPE).
However, everyone knows Yahoo's "core business" is nowhere near close to being worth $30 billion. If you subtract the value of the investments made over a decade ago in Alibaba (BABA) and almost two decades ago in Yahoo! Japan, the core business is arguably worth more like $4 billion today (although some would argue it has a negative value at present).
Yet, Yahoo's compensation committee -- made up of Chairman Maynard Webb and Jane Shaw -- has doled out stock compensation to Yahoo! CEO Marissa Mayer and other executives as if it is a $30 billion company rather than a $4 billion company.
In the list of public companies below, the first number is their market cap, the second number is the amount of stock compensation paid in 2014 (the last full year listed in Bloomberg):
Yahoo!: $4 billion, $100 million
Fortinet (FTNT): $4.8 billion, $10.7 million
Zynga (ZNGA): $2 billion, $21.6 million
Fitbit (FIT): $3 billion, $27.3 million
Splunk (SPLK): $5.9 billion, $10 million
FireEye (FEYE): $2.8 billion, $45.9 million
BlackBerry (BBRY): $4 billion, $33.6 million
Pandora (P): $2.1 billion, $21 million
Nuance Communications: $6 billion, $28.1 million
Open Text (OTEX): $6 billion, $38.3 million
Tableau (DATA): $3.3 billion, $4.3 million
So Yahoo's compensation committee, Webb and Shaw, paid its CEO and executives $100 million in 2014. The compensation committees of the other 10 companies listed, which have an average market cap of $3.9 billion, paid their CEOs and executive an average of $24.1 million in 2014.
How is it possible for Webb and Shaw to think it was acceptable to pay their executives more than three times what their peers paid their CEOs and executives?
It's the same reason why Yahoo's board has been comfortable signing off on nearly $3 billion in M&A over Mayer's tenure. It's the reason why Yahoo! has sponsored Davos for the past couple of years when the only other Internet companies sponsoring it were Facebook (FB) and Google (GOOGL). It's the same reason why Yahoo! sponsored the Met Ball. (Twitter, Facebook and Google are part of TheStreet's Action Alerts PLUS portfolio.)
Fortinet, Ken Goldman's old company, didn't sponsor the Met Ball. Nuance didn't sponsor the Met Ball. Zynga didn't sponsor the Met Ball. Why should Yahoo?
This excessive stock compensation paid out when it's not warranted is just the latest sign that this Yahoo! board (and management) is completely out of touch. They need to step on the gas to bring a sales process to a conclusion quickly at a high price, or they need to replace management and themselves and let someone else oversee a real turnaround of this company.