If you live in the Bay Area, you know this sign well. Since 1999, it decorated I-80 as you made your way to the Bay Bridge from the west. It was iconic. As a Bay Area nerd, I always felt a bit of pride seeing it. Yes: we were in Silicon Valley. Or close enough. But over the years, it came to seem a bit sad. Even when it was built, Google was on its way to ruling the world. It was put up when Excite passed up the offer to buy Google for just $750,000. And it was two years before Google turned down Yahoo!’s billion dollar offer to buy the search engine giant. But by the time the sign was taken down in 2011, it was more a cruel reminder of how the mighty could fall.
Back in 2008, Microsoft tried to take over Yahoo! with a $45 billion bid. Failing at that was probably the best business move in Microsoft’s long history. At the time, I was very ill — near death. My heart wasn’t functioning well and my brain was not getting enough oxygen. But even in that state, I could see that it was a terrible deal. Yahoo! was dying and there was nothing that was going to change that. Paying that amount of money for Yahoo! would have been on par to Excite’s decision that Google wasn’t worth three-quarter million dollars in 1999.
Marissa Mayer Cannot Fall
Yes, mighty companies like Yahoo! fall and disappear. Look at Excite: if you can find it. While the mighty companies fall, the mighty CEOs who run them into the ground do not fall. The current Yahoo! CEO, Marissa Mayer, will walk away with $55 million once she is finally thrown out of the company. But that’s not to say that she hasn’t suffered. Because of Yahoo!’s poor performance, she only made $25 million in 2014. And then last year, her compensation pancaked to a mere $14 million. How she’s surviving is anyone’s guess.
I want to be fair, however. She isn’t responsible for the failure of Yahoo! In general, I think the company has been reasonably managed. For example, the acquisition of Overture in 2001 was a smart move. But it was also an obvious move. I’m no good at business, so when a company does something that I think is smart, it can’t have taken a brilliant business mind to come up with it. So by 2001, the Yahoo! management team saw the future as clearly as I did. Yippy! (Note: Yippy.com is much more popular than Excite.com.)
Why Are CEOs So Important?
But it makes me wonder. By American standards, I’m roughly in the middle class. Yet we have people like Marissa Mayer (net worth: $430 million) and Terry Semel (net worth: $300 million). They never fall. They aren’t allowed to. But what is it that makes them worth so much? Semel ran the company from 2001 to 2007. And the company did about as well as you would expect. So why not just hire me? Or a trained monkey?
I suspect that it really is all a matter of appearances. The idea of a multi-billion dollar company being headed by someone who makes just a million dollars a year would look odd. And it would be seen as unfair to make a CEO’s pay truly dependent upon how well the company did. For example: imagine if instead of Marissa Mayer getting a pay cut of 44% in 2015, she had been required to pay Yahoo! $10 million dollars. Why not?! We hear so much about people being rewarded for taking risks. Getting your yearly pay cut from 10 times the average worker’s lifetime pay to five times it doesn’t seem like much of a risk to me.
Once a person reaches a certain level of success they become a kind of community charity. We all weep at the thought of them going without. In fact, I’ve heard much the same thing said on Fox News: it’s so much worse to go from rich to poor than to simply have been poor your whole life. To a normal person, such talk is rubbish, but it sounds quite reasonable to some people.
Companies Represent Nameless People
But there’s something much more nefarious in this. Marissa Mayer is a real person. The thousands of people who lose their jobs and pensions are nameless and faceless. They are allowed to suffer in their anonymity. They are but statistics. “Are there no prisons?” There must be something: some kind of system to take care of the nameless and faceless. But what would become of Marissa Mayer if not for her $55 million severance package? There are no government programs for her! No prisons to make sure she is kept fed.
Thus the once mighty Yahoo! is allowed to fall, because it only represents the destruction of the lives of the nameless masses. We would be monsters to allow real humans to suffer — the ones with names — the ones like Marissa Mayer. But as long as she and her ilk are taken care of, then Yahoo! can die because it won’t harm any real humans.