DealBook: Mayer, Yahoo’s C.E.O., Goes Chic

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DealBook: Mayer Strikes First Deal at Yahoo With Acquisition of Stamped

Stephen Lam/ReutersMarissa Mayer, chief of Yahoo.

Marissa Mayer promised earlier this week that Yahoo‘s deal-making was likely to revolve around smaller add-on acquisitions. On Thursday, she proved that she meant what she said.

The Internet company announced that it had purchased Stamped, a start-up focused on mobile products, for an undisclosed amount. The deal amounts to an “acqui-hire,” Silicon Valley’s term for buying a start-up for its talent.

The Stamped deal fits into two major initiatives that Ms. Mayer, Yahoo’s chief executive, mentioned on the company’s earnings call on Monday. One was a focus on smaller deals, none of which were likely to be blockbuster size.

“Many acquisitions and most acquisitions, a vast majority, are less than $100 million,” she told analysts on the call. “And so we’re looking for smaller-scale acquisitions that align well overall with our businesses.”

The other is a race to build up Yahoo’s mobile offerings, an area that she described as lacking at the company.

“While we’ve made progress, Yahoo hasn’t capitalized on the mobile opportunity,” she said. “We haven’t effectively optimized our Web sites, we’ve underinvested in our mobile front-end development and we’ve splintered our brands.”

Buying Stamped is intended to help address those issues. The company produced an app that centered on recommendations of restaurants, music and other entertainment by users. Its investors included Bain capital Ventures and Google Ventures, and its advisers included Mario Batali and the Instagram co-founder Kevin Systrom.

“Their experience building fun, useful, personalized mobile products aligns well with Yahoo!’s vision to create the best everyday mobile experience for our users,” Adam Cahan, a Yahoo senior vice president of emerging products and technology, wrote in a blog post on Thursday. “They will be a great asset as we expand Yahoo’s mobile efforts and build a world-class mobile development organization.”

For its part, Stamped’s team — composed in large part of former employees of Google, like Ms. Mayer — wrote in their own blog post: “As entrepreneurs, it’s never easy to walk away from something you built from the ground up, but the folks we met with at Yahoo! are simply top-notch and we’re thrilled to be joining them!”

Bits Blog: Yahoo's C.E.O., Marissa Mayer, Returns to Work With New C.O.O.

After a two-week maternity leave, Yahoo’s chief executive, Marissa Mayer, is back at work with one of her former Google colleagues in tow. (She alerted everyone to her dedication to work via Twitter.)

Ms. Mayer also announced Monday that she had hired Henrique De Castro, a vice president at Google, as Yahoo’s chief operating officer. Yahoo lured Mr. De Castro with a hefty pay package that according to a regulatory filing will include a $600,000 base salary plus a bonus that — depending how he performs — could be worth twice that much. Mr. De Castro will also receive $36 million in stock, half of that as a one-time retention equity award and the other half as performance-based stock options.

Most recently, Mr. De Castro led Google’s worldwide partner business solutions group, where he headed up advertising platforms and services for Google’s publisher and commerce partners. Luring advertisers back to Yahoo is a top priority for the company. Yahoo was once the biggest seller of display ads in the United States, but ceded that crown to Facebook and Google last year.

“Henrique is an incredibly accomplished and rigorous business leader, and I’m personally excited to have him join Yahoo’s strong leadership team,” Ms. Mayer said in a statement. “His operational experience in Internet advertising and his proven success in structuring and scaling
global organizations make him the perfect fit for Yahoo as we propel the business to its next phase of growth.”

Before his current position, Mr. De Castro led Google’s media, platforms and mobile division. That mobile experience should come in handy at Yahoo, where the company has yet to formulate a mobile strategy.

Mr. De Castro has been with Google since 2006. Before that, he served in various positions at Dell and McKinsey & Company. He is expected to start on Jan. 22.

Bits Blog: Carol Bartz on the Yahoo Board That Fired Her and Advice for Marissa Mayer

If Carol Bartz, the former chief executive of Yahoo, could go back in time, she would have changed one thing about her relationship with the board that fired her by phone last year.

Ms. Bartz would have spent more time understanding the relationships between the board members, she said Tuesday at Fortune’s Most Powerful Women summit in Laguna Niguel, Calif.

Alex Gallardo/Reuters Carol Bartz at Fortune’s Most Powerful Women event.

“I didn’t understand or have the time or take the time — that’s a much better thing to say, take the time — to understand the relationships they had between themselves,” she said.

How could she have done that as chief executive? “Well, you go in the men’s room,” she said. In reality, she added, she should have arranged dinners with two board members at a time.

Ms. Bartz gave Yahoo’s former board some credit — but also a little dig.

“Unfortunately for the board, they had gone through one year of the acquisition battle with Microsoft,” she said. “And in fairness to them, they just wanted it to be simple, like no more press, no more anything. But the business is tougher than that.”

Now Marissa Mayer has taken over as chief executive of Yahoo, with an entirely new board. Ms. Bartz said she and Ms. Mayer have spoken about the job.

Her advice for Ms. Mayer was to understand that change at such a big company is hard. Ms. Mayer is trying to change Yahoo’s culture in ways big and small, like serving free food and acquiring more startups.

“One piece of advice I would give her is changing culture is not a sprint, it’s a marathon,” Ms. Bartz said. “It’s very, very hard to affect culture. And you can get surprised thinking you’re farther down the path of change than you really are because, frankly, most of us like the way things are.”

Employees might nod when an executive suggests changes, she said, “then they go back to their cube and go, ‘I ain’t doing that.’ And so I think that’s important for all of us, is to realize how stuck individuals can be, much less 14,000 people.”

Ms. Bartz did not rule out taking another chief executive role, saying she is an opportunist rather than a planner.

“I grew up in a small town in Wisconsin,” she said. “I never thought I’d be where I am. I never thought I’d have bling,” she said, flashing the rings on her fingers before adding, with perfect comic timing, “that I bought.”

Ms. Bartz is the lead director of Cisco Systems, where she has been on the board for two decades, and she has also served on seven other public company boards during that time.

The difference between a good board and a bad one, she said, is not panicking, which she said the Cisco board achieves, and being genuinely interested in the company rather than prestige or money.

She said she has turned down board positions from banks because “I like banks because they keep my money safe, but I don’t want to talk about banks 12 times a year.”

Directors who are genuinely interested will take the time to get to know one another and the executives, but not be afraid to fire one another, she said.

“When trouble strikes, which it always does — bad economy, bad quarter, activists, takeover — when trouble strikes, those board members who don’t understand or are not committed are not helpful,” she said.

Bits Blog: Yahoo’s Mayer Gets Hefty Pay Package

Paul Zimmerman/Getty Images

10:10 p.m. | Updated More details added.

SAN FRANCISCO — Yahoo lured Marissa Mayer from Google with a lavish pay package that could total $129 million over five years — if she is able to get the company growing.

Yahoo disclosed details of its new chief executive’s compensation package in a regulatory filing on Thursday. It is larger than the pay package of the average chief executive in Silicon Valley, but not the largest among chiefs of publicly held technology companies.

Timothy D. Cook, Apple’s chief executive, has a compensation package valued at $378 million in salary, bonus and stock award that vests over 10 years. His annual base salary is $900,000.

Ms. Mayer’s pay package is higher than that of Meg Whitman, her counterpart at Hewlett-Packard. When H.P. hired Ms. Whitman, 55, as its chief executive, it offered her a $1 salary and stock options valued at $16.1 million that she cannot exercise unless H.P.’s stock meets certain targets by October 2013. She will also get a $6 million annual bonus if all goes well.

Ms. Mayer’s former boss at Google, Larry Page, receives only $1 in annual salary. But as a co-founder of the company, he owns more than 26.2 million shares of Google stock, which, at Thursday’s closing price of $593.06 a share, is worth about $15.5 billion.

Ms. Mayer’s package includes a $1 million annual base salary and a bonus of up to $4 million a year, depending on company performance. She will receive $12 million in the form of a stock payment this year — half in restricted stock, the remainder in options — and comparable awards in subsequent years. Yahoo will also give her a one-time “retention equity award” worth $30 million that vests over five years.

Google never had to disclose Ms. Mayer’s salary because she was not one of the highest-compensated executives at the company, although she was one of the most visible. But to make up for what she left on the table at Google, Yahoo said it would pay her a one-time “make whole” stock grant of $14 million.

“It’s big,” said Colin Gillis, an analyst at BGC Partners. “But Yahoo is a multibillion-dollar company. If she can create value, it’s a small percentage. If she doesn’t, she’ll join a long succession of Yahoo C.E.O.’s with sizable pay packages who did not add value.”

Yahoo offered Ms. Mayer more than it had her immediate predecessors, Scott Thompson and Carol Bartz. It offered Mr. Thompson a $1 million base salary and stock grants worth about $22.5 million. He left four months into the job, without severance, amid accusations that he had exaggerated his credentials on his resume, but he managed to keep $7 million in cash and stock grants that had already vested.

When Ms. Bartz joined Yahoo in 2009, the company offered her a $1 million salary and stock and cash grants worth $19 million, plus options worth five million shares that exercised at $11.73.

Ms. Mayer, known for holding extravagant parties, collecting expensive art and wearing designer gowns, does not lack for money. As Google’s 20th employee, she made millions in Google stock while running its search business and overseeing successful products like Gmail and Google Maps.

Bits Blog: Yahoo’s Mayer Gets Hefty Pay Package

Paul Zimmerman/Getty Images

10:10 p.m. | Updated More details added.

SAN FRANCISCO — Yahoo lured Marissa Mayer from Google with a lavish pay package that could total $129 million over five years — if she is able to get the company growing.

Yahoo disclosed details of its new chief executive’s compensation package in a regulatory filing on Thursday. It is larger than the pay package of the average chief executive in Silicon Valley, but not the largest among chiefs of publicly held technology companies.

Timothy D. Cook, Apple’s chief executive, has a compensation package valued at $378 million in salary, bonus and stock award that vests over 10 years. His annual base salary is $900,000.

Ms. Mayer’s pay package is higher than that of Meg Whitman, her counterpart at Hewlett-Packard. When H.P. hired Ms. Whitman, 55, as its chief executive, it offered her a $1 salary and stock options valued at $16.1 million that she cannot exercise unless H.P.’s stock meets certain targets by October 2013. She will also get a $6 million annual bonus if all goes well.

Ms. Mayer’s former boss at Google, Larry Page, receives only $1 in annual salary. But as a co-founder of the company, he owns more than 26.2 million shares of Google stock, which, at Thursday’s closing price of $593.06 a share, is worth about $15.5 billion.

Ms. Mayer’s package includes a $1 million annual base salary and a bonus of up to $4 million a year, depending on company performance. She will receive $12 million in the form of a stock payment this year — half in restricted stock, the remainder in options — and comparable awards in subsequent years. Yahoo will also give her a one-time “retention equity award” worth $30 million that vests over five years.

Google never had to disclose Ms. Mayer’s salary because she was not one of the highest-compensated executives at the company, although she was one of the most visible. But to make up for what she left on the table at Google, Yahoo said it would pay her a one-time “make whole” stock grant of $14 million.

“It’s big,” said Colin Gillis, an analyst at BGC Partners. “But Yahoo is a multibillion-dollar company. If she can create value, it’s a small percentage. If she doesn’t, she’ll join a long succession of Yahoo C.E.O.’s with sizable pay packages who did not add value.”

Yahoo offered Ms. Mayer more than it had her immediate predecessors, Scott Thompson and Carol Bartz. It offered Mr. Thompson a $1 million base salary and stock grants worth about $22.5 million. He left four months into the job, without severance, amid accusations that he had exaggerated his credentials on his resume, but he managed to keep $7 million in cash and stock grants that had already vested.

When Ms. Bartz joined Yahoo in 2009, the company offered her a $1 million salary and stock and cash grants worth $19 million, plus options worth five million shares that exercised at $11.73.

Ms. Mayer, known for holding extravagant parties, collecting expensive art and wearing designer gowns, does not lack for money. As Google’s 20th employee, she made millions in Google stock while running its search business and overseeing successful products like Gmail and Google Maps.

Yahoo Quarterly Results Show Challenge Mayer Faces

Revenue and net income were stalled at last year’s levels. Although Yahoo has amassed an enormous audience, some advertisers are looking elsewhere.

But on Tuesday, for the first time in a long time, people took an interest in Yahoo. The day before, Ms. Mayer left a senior post at Google to lead the company that Google had left in its wake.

Analysts and shareholders — desperate for signs of life from the moribund company — are eager to see whether Ms. Mayer, 37, can lure back advertisers, reinvigorate a muddled brand and improve morale at a company marred by executive churn, constant cost-cutting initiatives and mass layoffs.

“Bringing in Marissa Mayer gets people’s attention,” said David Hallerman, a principal analyst at eMarketer. “The sheer attention that they are getting because of hiring her will be helpful for a while. But it will only carry them so far,” he warned.

The first problem she faces is Yahoo’s identity crisis.

Previous chief executives — and there have been four of them in the last five years, plus two interim chiefs — have had a difficult time trying to define what Yahoo actually does. Most people cannot explain the company in a single simple sentence. “The age-old question with Yahoo has been: Is it technology first or is it media or content first?” said David Cohen, the chief media officer at Universal McCann.

Most recently, under Ross Levinsohn, who has been the acting chief since May, Yahoo seemed focused on content. It announced a number of prominent deals with ABC News, including a new weekly Web video show starring Katie Couric called “Katie’s Take.” During a presentation made to a room full of advertisers in April in Manhattan, Mr. Levinsohn highlighted Yahoo’s own coverage of sports, finance, the presidential campaign and the coming Summer Olympics.

With 700 million users, Yahoo still draws one of the largest audiences on the Web. More people use Yahoo’s e-mail service than any other service. Yahoo Sports, Yahoo Finance and Flickr, the photo site, are the most popular destinations in their categories.

But over the last few years advertising technology has grown more sophisticated and advertisers themselves have come under financial pressures, prompting many of them to buy ads more cheaply and more quickly through ad networks and auction-based sales. Yahoo’s advertisers are now experimenting with new platforms, most notably Facebook.

To challenge Google’s ad dominance, Yahoo formed a partnership with Microsoft and AOL last year on a deal to sell advertising for one another. And in January, Yahoo bought the online advertising company Interclick, which allows marketers to tailor ads to specific demographics.

The two moves led to the creation of Genome, Yahoo’s new digital advertising product, which offers advertisers data about their users and crunches that data so marketers can create custom ad campaigns. But Yahoo’s revenue from online display ads rose just 2 percent in the second quarter compared with a year ago, and it continues to lose market share.

The choice of Ms. Mayer, who oversaw some of Google’s most successful products — the search engine business, Gmail and Google Maps among them — suggests that Yahoo may turn its focus to new products, like mobile technologies. “Yahoo has a very healthy search advertising and display advertising business,” Ms. Mayer said in an interview on Monday. “I’m interested in what Yahoo can do with video and mobile, both of which are very promising.”

Brian Wieser, a senior research analyst at Pivotal Research Group, said advertisers had grown largely indifferent toward Yahoo. “What would get them more money is if they have a sexier brand,” he said. That’s where Ms. Mayer’s Google sheen could help the company. “We don’t know that she’s not the next Steve Jobs,” Mr. Wieser said.

Ms. Mayer may have the hardest time taking Yahoo into the mobile advertising arena, a market dominated by her former employer. Unlike Yahoo, Google and Apple dominate the mobile advertising space with hardware and software options.

And that’s where it runs headlong into its identity problem. “Yahoo is still mainly a media company. It doesn’t have an operating system. It doesn’t have the devices,” Mr. Hallerman, of eMarketer, said. “I don’t know if there’s room in the market for a fourth mobile platform.”

Asked whether she plans to run Yahoo as a media company or a technology company, Ms. Mayer said, “It’s not the right question. The most important thing is to give end users something valuable, inspiring and delightful that makes them want to come to Yahoo every day.”

Ms. Mayer skipped Yahoo’s earnings call Tuesday. Thanks to cost-cutting initiatives and restructuring, Yahoo’s second-quarter earnings beat analysts’ expectations, but revenue was flat at $1.22 billion. The company reported Tuesday that net income in the second quarter fell 4.2 percent from the same quarter a year earlier, to $228.5 million, or 18 cents a share.

Nicole Perlroth reported from San Francisco and Tanzina Vega from New York.

DealBook: Yahoo Taps Marissa Mayer of Google to Be Its New Chief

Andrew Harrer/Bloomberg NewsMarissa Mayer, one of the top executives at Google, will be the new chief of Yahoo.

Marissa Mayer, one of the top executives at Google, will be the next chief executive of Yahoo, making her one of the most prominent women in Silicon Valley and corporate America.

The appointment of Ms. Mayer, who was employee No. 20 at Google and was one of the few public faces of the company, is considered a surprising coup for Yahoo, which has struggled in recent years to attract top flight talent in its battle with competitors like Google and Facebook.

Ms. Mayer, 37, had for years been responsible for the look and feel of Google’s most popular products: the famously unadorned white search homepage, Gmail, Google News and Google Images. More recently, Ms. Mayer, an engineer by training whose first job at Google included computer programming, was put in charge of the company’s location and local services, including Google Maps, overseeing more than 1,000 product managers. She also sat on Google’s operating committee, part of a small circle of senior executives who had the ear of Google’s co-founders, Larry Page and Sergey Brin.

With her appointment as the president and chief executive of Yahoo, Ms. Mayer joins a short list of women in technology companies to hold the top spot. The elite club includes Meg Whitman, the chief executive of Hewlett-Packard, and Virginia Rometty, the head of I.B.M. Another senior woman in Silicon Valley, Sheryl Sandberg, is Facebook’s chief operating officer.

For Ms. Mayer, Google’s first female engineer, the move to Yahoo is an opportunity to step out on her own and claim a bigger stage. Ms. Mayer has been one of the search giant’s most visible and powerful executives, often tapped for keynotes at technology conferences and glamorous magazine spreads. Her life outside of Google, including her posh penthouse in the Four Seasons in San Francisco and her affinity for cupcakes, has also been popular Internet fodder.

In a sign of grander ambitions, Ms. Mayer, in recent months, has started to find success outside of Google. In April, Wal-Mart, the world’s largest retailer, tapped Ms. Mayer to join its board, her first seat at a public company. She is one of four women on Wal-Mart’s 16-member board.

Still, at Google, Ms. Mayer did not have a clear path to the C-Suite.

After years of heading-up its search business, Google’s most profitable unit, Ms. Mayer became vice president of the company’s local efforts in late 2010. The following year, Google promoted another executive, Jeff Huber, to be the senior vice president of local and commerce, putting him one level above Ms. Mayer’s post. Although Google characterized her move as a promotion at the time, some wondered if she would be content with the reorganization.

Ms. Mayer resigned from Google on Monday afternoon by telephone. She starts at Yahoo on Tuesday. Ms. Mayer will also join Yahoo’s board.

In an interview, Ms. Mayer said she “had an amazing time at Google,” where she has worked for the last 13 years, but that ultimately “it was a reasonably easy decision” to take the top job at Yahoo. She said Yahoo was “one of the best brands on the Internet.”

She recalled that when she first started at Google, the company would conduct user surveys and “people didn’t understand the difference between Yahoo and the Internet.” She said she hoped “to get focused on creating a really great user experiences” and to attract new talent from Silicon Valley to the company. “Talent is what drives technology companies,” she said. Some of Ms. Mayer’s close colleagues at Google included Bret Taylor, the chief technology officer at Facebook, and Brian Rakowski, the vice president in charge of Google Chrome and the product manager who introduced Gmail.

As she hashes out Yahoo’s strategy, Ms. Mayer said she was intent on leveraging the Internet company’s strong franchises including e-mail, finance and sports. She also hopes to do more with its video broadband and its mobile businesses.

Still, Ms. Mayer is unlikely to try to make Yahoo a direct competitor to Google in the world of search. In 2009, Yahoo gave up its search engine and partnered with Microsoft, which was seen by some analysts as a concession that it couldn’t compete.

“I actually think the partnership has been a positive for the company,” she said.

Ms. Mayer said she was first approached in the middle of June about the job after returning from a trip to China.

Ms. Mayer will be facing an uphill battle as she tries to revive Yahoo. Yahoo remains one of the largest properties on the Web, but it has failed to keep pace with rivals Google and Facebook, which have been more nimble and more adept at leveraging the increasingly social nature of the Web. In the first quarter, Yahoo’s revenue rose 1 percent from a year ago, after a string of steep declines.

For Yahoo, the hope is that Ms. Mayer and her discerning eye will provide some much-needed direction for what has been, as of late, a rudderless ship.

In May, Yahoo’s most recent chief executive, Scott Thompson, resigned after questions emerged about whether he lied about certain academic credentials; he had been on the job for only four months. Yahoo’s board of directors has also been reconstituted, adding three new members, including the activist investor, Daniel Loeb of Third Point, the company’s second-largest investor who had been fighting to have Mr. Thompson ousted. Michael Wolf, the longtime media consultant and former president and chief operating officer of Viacom’s MTV Networks, was also added to the board.

Yahoo’s corner office has been a revolving door over the last decade as the company has unsuccessfully sought to return to its original glory days in the late 1990s. Since 1995, the company has had at least seven different permanent and interim chiefs. Its first chief executive Tim Koogle, was replaced by former co-C.E.O. of Warner Brothers Terry Semel in 2001. Mr. Semel sought to remake Yahoo as a media company.

In 2007, Jerry Yang, Yahoo’s co-founder, became C.E.O. and tried to return the company to its technology roots. However, he resigned in 2009 and the top job was given to Carol Bartz. But she was fired last year after failing to meet the board’s expectations. Tim Morse, the company’s chief financial officer, then stepped in on an interim basis.

The company’s shares have fallen 41 percent over the last five years.

“In the last few years, given the turnover, there has been a lack of attention on the user experience,” David Filo, co-founder of Yahoo, who still works at the company, said in an interview on Monday. “We need to get back to basics.” He said he was very excited Ms. Mayer agreed to join the company. “It will be a surprise for a lot of people.”

For the last several weeks, a half dozen names had been bandied about to take the top job. But Ms. Mayer’s name was never mentioned. Most analysts believed that Yahoo’s board was planning to hire Ross Levinsohn, who had taken over as interim chief executive after Mr. Thompson departed. Mr. Levinsohn, formerly the company’s head of global media for Yahoo, tried to undo some of Mr. Thompson’s efforts in his short tenure.

During Mr. Thompson’s brief time at the top of the company, he announced plans to cut thousands of jobs and sued one of its partners, Facebook, for patent infringement. Though bold, the moves also vexed some executives, who were wary of locking horns with the world’s largest social network and felt that Mr. Thompson was rashly trimming payroll. There was also concern that Mr. Thompson, an outsider in the advertising world, was alienating influential Madison Avenue executives.

Earlier this month, Mr. Levinsohn made peace with Facebook, agreeing to a settlement that deepens the companies’ partnership and includes a cross-licensing deal that will effectively prevent future patent lawsuits between the two companies. Mr. Levinsohn, a former News Corporation executive, has also been focused on shoring up the company’s core advertising business, recently poaching another Google executive, Michael Barrett, to be the company’s chief revenue officer.

While Mr. Levinsohn has been seen as a top contender for the permanent position, insiders questioned whether he had the background of nonadvertising experience. Before picking Mr. Levinsohn, the board had also considered Hulu’s chief, Jason Kilar, for the top slot, given his success in building and managing the online video streaming service. Earlier this month, Hulu said Mr. Kilar had declined to be considered.