Yahoo’s New Rock Star Retention Program

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1. JoeUser
   

   March 29th, 2008 at 2:59 pm

   They aren’t options. They are RSUs, and this isn’t a new thing. “Rock Star” RSUs have been handed out for years. The only thing that is slightly different is the 18-month vesting schedule this time around.

2. Bob
   

   March 29th, 2008 at 3:00 pm

   With 18-month vesting, it sounds like they’re just helping the rock stars be able to afford to leave safely in a year-and-a-half. I suppose they just need to get people to stay through trying to fight off MS at the moment and they’ll deal with the consequences down the road.

3. damon
   

   March 29th, 2008 at 3:02 pm

   the word flailing comes to mind, this rabbid anti ms mindset is just weird

4. Jollyjo
   

   March 29th, 2008 at 3:03 pm

   I thought Yahoo was floundering due to a corporate strategy that had not converted to truck loads of revenue.

   Stock Options are great but without a corporate strategy that makes sense why the fuss over the retention of so-called stars?

   Aren’t these the same people who would have been responsible for the flawed strategy in the first place?

   Is the plan to motivate some sense into these people? To yahoo…I say sell (now)!

5. Michael Arrington
   

   March 29th, 2008 at 3:03 pm

   JoeUser - a RSU is just another type of stock option. It’s actually a stock grant that can be pulled back under certain circumstances. They’re used because they are more tax advantageous to the person getting them.

   My understanding from our sources is that this is a different program put in place because of the special circumstances of the company, and are on top of normal stock grants which are given every year.

6. mike
   

   March 29th, 2008 at 3:09 pm

   Nice scoop. Was this direct to you or does someone deserve a hat tip?

7. John
   

   March 29th, 2008 at 3:18 pm

   RSUs actually just end up being W2 income when you receive them. They are the same as a future cash bonus for the employee.

8. Michael Arrington
   

   March 29th, 2008 at 3:27 pm

   John, actually that’s not quite right. For public companies they almost always offer the option to take gains in cash as opposed to actual stock. but the gains would be capital gains (short or long term), not income. If yahoo is giving out RSUs in a way that requires to upfront payment or debt to acquire the stock, then the gain would be income like you said. I don’t have those details, nor do they matter much for this post. The key point is that a small percentage of employees are getting big extra grants as an incentive to stay.

9. Michael Arrington
   

   March 29th, 2008 at 3:29 pm

   there is more on RSUs here, but the term has a lot of flexibility and can mean many different things. I could actually pull their plan from SEC filings and give a definitive answer, but like I said it’s not particularly relevant to the discussion.
   http://en.wikipedia.org/wiki/Restricted_Stock_Unit

10. Fabian Schonholz
    

    March 29th, 2008 at 3:29 pm

    I am sad for Yahoo! It used to be a company that I would have liked to work for but now it is “fighting” to stay a company with all these “desertions”. A real bummer.

11. im pissed
    

    March 29th, 2008 at 3:31 pm

    now, im pissed that i didnt get it.

12. JoeUser
    

    March 29th, 2008 at 3:44 pm

    I still disagree with you that RSUs are just like options. The word “option” comes from the idea that you have an option to buy shares at a predetermined price. There is no option to buy involved with an RSU. It is simply a stock grant.

    And your source is still wrong. He/she is right that this is not part of the yearly grant program for key employees, but it is instead a special-case grant for a very select group of employees. The problem is that you make it sound like this is the first time Yahoo has done this, which is incorrect. This has happened many times over the years. Like I said, the only unique thing about this one is the shorter vesting period.

13. MrCashyCash
    

    March 29th, 2008 at 3:52 pm

    Jollyjo makes a good point.

    Why baby the people who haven’t delivered?

14. Someone
    

    March 29th, 2008 at 4:09 pm

    What can you say.

15. Yes!
    

    March 29th, 2008 at 4:13 pm

    What can you say, here comes the checks! WooHoo!

16. Someone else
    

    March 29th, 2008 at 4:20 pm

    MrCashyCash/Jollyjo as the story states, this isn’t given to upper management. Do you really think Yahoo’s problems are due to poor execution at the lower levels? The people setting the corporate strategy aren’t the people getting this bonus.

17. Hhmm
    

    March 29th, 2008 at 4:37 pm

    When were these handed out?

18. Jollyjo
    

    March 29th, 2008 at 5:20 pm

    @ someone else

    It could be a bundled corporate strategy, failure to execute at the lower levels or a combination of both.

    Not sure it really matters. All I am certain of is that Yahoo has failed to excite investors for sometime now which suggests that this company needs a new direction, people who can execute better or both.

    As long as these are missing, still not sure what purpose the carrot serves? It’s just a way to make it seem that things are happening but we all know it will be the same story next year (or worse).

19. Crunchy McCrunch
    

    March 29th, 2008 at 7:27 pm

    Q: How do you find a rockstar Yahoo! in the crowd?
    A: They have a Google employee badge on them.

20. beh
    

    March 29th, 2008 at 7:36 pm

    The Y! RSUs have a $0 strike price - instead of most Y! grants which always tend to be on the high end of the curve (say $31 and change when they granted them in bulk Q3 2007).

21. lol
    

    March 29th, 2008 at 8:14 pm

    #19, good one.
    though there are many useless ppl in google (incl frm y!)

22. chush.net
    

    March 29th, 2008 at 8:27 pm

    Wow, do Y! execs really think that they can fend off MS? And do Yahoos really think that these options/RSUs will be worth anything if the acquisition does not happen? Don’t you ppl see that the whole point of this is to pinch MS one more time. All of this just sounds like Jerry plans to give his brand to MS but make all the best Y! employees leave MS a year after the acquisition happens.

23. Joseph Hunkins
    

    March 29th, 2008 at 8:28 pm

    Interesting - any idea what the average number of shares would be for somebody who has been there from the start? vs Google?

24. chush.net
    

    March 29th, 2008 at 8:32 pm

    One more thing - way to go Jerry! Maybe he does care about the employees a lot. Think about it, if you were a Yahoo! would you not be looking forward to the acquisition, because of the prevously filed “change of control” package. I have to give them this - I am sure it does serve the purpose of making employees stay through the process. Why leave if there is a fat RSU/options bonus waiting plus 4 to 24 months of salary just for staying there.

25. whoopie
    

    March 29th, 2008 at 8:49 pm

    yahoo’s rockstars don’t work for them yet. the people management “thinks” are rockstars tend to be the i-talk-alot-on-devel-random crowd or the serial self-promoters who think blogging and mocking-up pointless mashups constitutes a contribution. absolutely without a doubt i can identify by name a dozen people who i would grant something big…and they all are now “former” yahoos. google, facebook, you name it, the best found a new place to hang their hat a while ago. since the stellar talent has already moved on, one must wonder what the point of this is. yahoo’s share price gains have nothing to do with technical contributions anymore, they are entirely predicated on msft’s next move. frankly you could just put the org on autopilot and wait for the shoe to drop and the share price would continue to trend above 27.

    in any case, yahoo has never gotten compensation. they continue to play the pro-sports model…pay 80% of your compensation allotment to 5% of the staff, thinking that a few superstars can literally pull the team across the goal line like in 1997. times have changed folks, although they are still clinging to “zod’s laws” that recommended such lopsided compensation. folks, you have to put a little something under the tree for everyone you deliver decent wage reviews for or the resentment breeds.

26. MikeT
    

    March 29th, 2008 at 8:55 pm

    too bad…
    these are all signs of a drowning leviathan…
    They MUST sell to Microsoft, or they have no future…

27. CARversation.com
    

    March 29th, 2008 at 9:22 pm

    STUPID

28. Soontobexyahoo
    

    March 29th, 2008 at 9:38 pm

    well! This totally blows. I work hard for yahoo and didn’t get sh!t… Time to move on I guess. Post 25 is right on.

29. yao ming
    

    March 29th, 2008 at 10:03 pm

    . I work hard for yahoo and didn’t get sh!t… Time to move on I guess. Post 25 is right on.

30. yahooworker
    

    March 29th, 2008 at 10:19 pm

    A current yahoo employee here. My take on this is, first…congratulations to the folks that received the grant. I for one were not lucky enough, but still likes working for the company. However, it does make me feel dissapointed to hear only a select group got the grant. Despite what is going on, the vast number of employees like myself continues chug away and still believes yahoo is one of the better companies to work for in the valley.

    Unfortunately, management has chosen to reward only the few that are considered super stars. This sends a very bad message imo, those of us that didn’t get any stocks are not worthy. In a time when people are leaving left and right, a better strategy would be to grant everyone that received a good review a little something. A few hundred shares here and there would be nice. I’m not talking about thousands of shares, but at the very least, this would show Yahoo cares.

    To those that thinks the only people that are left at Yahoo these days are losers that can’t a job, you’re totally wrong. There are still plenty of great talents here. Some of us actually do like working at Yahoo! (overall)..

31. current employee
    

    March 29th, 2008 at 10:31 pm

    It sounds like these grants have already been given out? (clearly i didnt get one)

32. noam
    

    March 29th, 2008 at 11:28 pm

    I assume this move has a lot to do with the potential MS acquisition. If so, it could be seen as a timer set on the MS deal. These “Rock Stars”, from Yahoo’s point of view, are people that took a major part in making Yahoo what it is and will be needed in order to hand over the company to MS. If they leave before the deal is done, it will be much harder for MS to successfully integrate Yahoo’s systems into theirs. Therefore, this move could be seen as a timer. MS needs to sign the deal as soon as possible or they will risk loosing key Yahoo employees that would be needed in order to successfully complete the systems integration. If the deal is not signed fast enough, these Yahoo employees will find themselves in a very comfortable place. MS, if the deal is made, will need them in order to execute the merge and at the same time, will have have to negotiate a new contract. That means a lot of cash coming the “Rock Star”s way.

33. random
    

    March 30th, 2008 at 12:05 am

    I guess the Y! HR do have a problem on their hands but they should have anticipated that this kind of news does not lie low for too long (especially given that blogs have democratized the news/gossip distribution process).

    Don’t know if the “Rock Stars” would now decide to stay longer than they would have otherwise, but i would assume that a lot of self respecting, ambitious and competent yahoos (who didn’t get these RSU’s ) would now ask themselves that are they bleeding (purple) for the wrong firm.

34. anotherY!
    

    March 30th, 2008 at 12:17 am

    John and JoeUser are right. RSU’s are essentially like cash bonus since employees don’t pay anything for them.

    @yahooworker, I concur. Despite all the events, I still enjoy working at Yahoo very much. It is a good company to work for and the people are cool.
    I also agree that there are still lots of talented people there.
    Every company has its stars and underperformers. Saying that only losers are left at Y! is just stereotyping.
    That’s like saying that poor and developing countries are struggling because the people there aren’t smart enough.

35. FormerYahoo
    

    March 30th, 2008 at 7:36 am

    As a former Yahoo! (no, not part of recent layoffs) — I can shed a little more light.

    1. The RSU’s given to “special” people is nothing new. I received them a few years back and was told to keep it hush hush because the % of folks getting them was very limited. Never heard an actual % though. It was clearly explained to me as a retention tool for the people that the (often misguided) management wanted to keep on the roster. Even then, the vesting was accelerated and I even had some that matured in only 12 months. So this is definitely nothing new at all.

    2. The past few years Y! has typically given a mix of options and RSUs. RSU was a response to Google’s use of same. Works nicely when the stock price doesn’t move much over 3-4 years because at least the employee gets something, even if the stock price goes down whereas with an option if it is underwater it is just worthless.

    3. I once did hear about some kind of “Rock Star” deal for existing employees that was designed to create a package that was comparable to being part of a decent-sized startup acquisition. That way the “big payoff” allure of going to a startup would be mitigated. As far as I know, however, that real “Rock Star” package never came to fruition.

    4. Y! is a fantastic place to work overall. They care about people and really “get” many of the important things. While Y! is a profitable money-printing-machine compared to most companies, the fact that Google outperforming Y! every time just makes them look bad over and over.

    5. I am disturbed by the current trends at Y! to keep a lot of the middle management who have been around a long time (resting+vesting types or just lucky-to-get-in-when-the-stock-was-low-and-now-climbing-the-corporate-ladder-year-by-year types) and dumping the more junior folks that really needed some mentoring and leadership to become the future leaders of the company.

36. anothery!employee
    

    March 30th, 2008 at 10:38 am

    Has anyone from Y! gotten the grant? or Do you know of anyone that has? This is just depressing to those that didn’t get them. I’ve been here for 4 years now and work as hard as anyone. I guess my manager just is a liar if this is true. During a recent a review, I was told no grants were being awarded, period. That MOFO!! I’m now PO. How come only these people are getting them? I agree with one of the above post, in order for Yahoo to be successful, they need to keep the 80% happy as well. There’s going to be a heck a lot of grumbling now that the word is out. Spread the wealth! WTF?
    It’s hard enough to wake up every morning going to work at a company that’s on the verge of joining the dark side, but now to hear this will make people think twice about remaining loyal.

37. yahoolosers
    

    March 30th, 2008 at 11:13 am

    oh gosh here we go again.
    guys… if yahoo disappeared tomorrow.. would anyone care? would anyone really miss it. the answer is NO. now i am sure alot of really great people work there but they do not need tens of thousands of employees… it a freaking search engine for goodness sake. and a crappy one at that. yahoo mail looks the same for the last 10 years, finance looked the same for the last 15 years untill recently thanks to google finance getting in on quotes (although i read not may people use it).

    yahoo management: you guys are has-beens! just move on. nobody cares about you anymore. remember: theglobe.com, lycos, excite, go.com,…. oh do i really need to continue. your time has come and gone.

38. Sudoku Maniac
    

    March 30th, 2008 at 3:50 pm

    so who won ? you or you ?

39. dave
    

    March 30th, 2008 at 7:50 pm

    dude, i know **EXACTLY** who your source is and she honestly doesn’t know what she is talking about! you are truly a sucker for a cute face…

    the forward vesting clause on that acceleration is interesting, but otherwise this is same old same old - yahoo has historically done well with key talent, particularly in the face of google, facebook and others…

40. pit
    

    March 31st, 2008 at 7:42 am

    guys, I would like to know how many RSUs or even Stock Options do your companies give you. Most of the answers would be 0 - ZERO-NONE! haha. It is great to see so many jealous people that get nothing but luncheon vouchers out of their companies and still criticize Yahoo.

    even if they grant you just 500 RSUs after one year you can pocket aprox 15k with the price @USD30. Not bad huh? At the end of the day it is like a bonus.

41. leaving yahoo
    

    March 31st, 2008 at 8:44 am

    As a Yahoo employee, I was offered this plan, but left anyway. I refuse to work for M$FT.

    It was very tough to turn down ~75% of my salary to stay for 18 months, but I did.

    One other detail — they actually vest in two chunks, 1 chunk in 9 months (33%) and they other 2/3 in 18 months.

42. does it matter
    

    April 1st, 2008 at 9:38 pm

    Honestly. Walk through the Yahoo buildings and hear how quiet it is. Drive by the Yahoo parking lot at 5:30pm and see it empty. Drive by the Google parking lot at 8pm and see how you can’t find a free spot… Yahoo is getting its lunch eaten because no one is really working any more. Great place to rest and vest while you go through the motions if you don’t care about wasting your life.

    For the rest of us, who in their right mind wants to work at Microsoft? It’s a done deal, it’s just a matter of time. The farewell emails and goodbye lunches are flying fast and furious in Sunnyvale. They could double my salary and my options and I still wouldn’t stay at Yahoo for another 6 months.

    Get out while you can.

43. Formertechyahoo
    

    April 3rd, 2008 at 12:56 am

    Every couple of years, Yahoo comes up with those “rock-star” programs.

    Usually, they give out about $25-$50k worth of cash/RSU/options over 3-4 year period.

    What is really disturbing (if not compromises fiduciary duty) is how much senior technology management is pocketing. Those programs designed to keep the middle/junior talent, but Zod used to give himself 50,000 RSUs year after year every year. Guys like Qi Lu, David Henke, Ash and others are granting themselves hundreds of thousands of $$ year after year. Useless guys like Mark Morrisey and David Ku whose biggest claim to fame was delivering pathetic Panama project are getting tens of thousands of RSUs, while little guys get nothing. (btw, every year they say that Sr. Mgmt is not eligible - it’s just not true, they get much bigger grants through “Sr. Rock-star” program). No wonder executives are sticking around and all the real talent is leaving every day.

44. va te faire enculer pétasse
    

    April 5th, 2008 at 5:04 pm

    Mon ami viens de briser un verre pour boir avec un morceau pour les bras de chaise en caoutchou. (C’est le gas le plus con que j’ai jamais rencontré.)

45. va te faire enculer pétasse
    

    April 5th, 2008 at 5:06 pm

    je retire ce que j’ai dit. (Dans c’est plus beau rêve.)

46. va te faire enculer pétasse
    

    April 5th, 2008 at 5:07 pm

    mais non c’est une blague. (Tabarnaque que c’est quand même drôle.)

47. wifeofay!
    

    April 10th, 2008 at 4:05 am

    I think you people forget there is more than one office in Y! My husband works in London and got the package, he has almost been there a year. It was due to his innovation with new products, and his work ethic.

48. b
    

    April 12th, 2008 at 10:33 pm

    I concur with the other yahoos who have posted. This program has been going on for several years. Nothing new here.

    I do hope they do a better job spreading these packages at the lower levels of the organization than they have in the past. As others have pointed out, the biggest recipients of these pay packages in the past were at the very top of the company. Ever wonder why Terry Semel was the most highly compensated executive in the world for a few years running? It was a result of the board over compensating him with RSU and Stock Options. I think it is the tendency to enrich the top of the corporate hierarchy that has caused Y! to lose so many talented people in such a short amount of time. If it seemed more fair, the employee base might be more content to stick around. Even then, there are still a lot of talented and highly capable yahoos roaming the halls of its offices.

    As for Microsoft, it is just desperate. If it is able to pull off this stunt and purchase Y!, I expect an exodus of talented Y! employees before all is said and done (I’ll be waving goodbye as well). In the end, it will succeed in killing off two companies at once. It might still succeed in that, even if it isn’t able to buy Y!. There are still many more obstacles ahead, including a showdown with EU regulators over antitrust concerns while weighed down by its recent antitrust setbacks, a possible Democratic administration which may provide more than a cursory glance over the application, a possible poison pill invoked by the Y! board, disgruntled shareholders of both companies, negative public opinion, an impending drop in revenues as fewer computers are sold combined with open source software eating its lunch, and a tight credit market that will make it harder for any company (including MS) from getting loans to pursue its prey.