After a little more than five and a half months as CEO
of
Yahoo! Inc.
(
YHOO
), Marissa Mayer has received a bonus of $1.1 million. This is in
addition to her annual base pay of $1.1 million and long-term
stock compensations worth $56 million.
Yet Yahoo shareholders are not complaining. Since Mayer quit
Google Inc.
(
GOOG
) to join Yahoo, the company's stock has risen steadily. From
$16.54 in the last week of October, the stock price has risen
steadily to $22.80. This 38% gain shows that investors are of the
view that Mayer is taking the company in the right direction.
The software major has been faced with several problems over
time. Some of them have come from actual performance. Yahoo, once
the largest seller of online display ads, has been dethroned by
Google and
Facebook, Inc.
(
FB
). Meanwhile, its home page and email services had become nearly
obsolete, depending primarily on people who had simply not cared
to change habits. Finally, it had missed two key Internet trends
- social networking and the proliferation of mobile services.
As the stock continues to appreciate with Mayer's appearance as
the CEO, expectations from her tenure are also high. Most of the
company's problems are internal and have to do with its culture.
First, the company has seen six CEOs in five years and needs
stability at the top. Additionally, all of them have looked
outward instead of fixing internal issues.
This means that some tough decisions need be taken at the
rudderless ship that has been Yahoo. Mayer has fired the first
salvo, via an internal memo which has ended the company's
work-from-home option. Those privy to hearing her speak on the
issue have learned that she wants "all hands on deck."
The idea is that more people at the workplace would mean more
impromptu meetings, brainstorming and quicker decision-making.
Around 200 people at Yahoo were working from home, and Mayer was
greeted by empty floors and parking lots, contrary to the culture
at her earlier employer Google. Many of these employees had low
productivity and some of them had even begun working on their own
start-ups.
Her decision has been met with much criticism. A spokeswoman for
the website Working Mother has said that the new policy was
"incredibly disappointing." She said Mayer was taking "her
workforce back to the last century" through this move.
Meanwhile Richard Branson, who heads
Virgin Media, Inc.
(
VMED
), has also criticized the policy claiming that this was "a
backward step in an age when remote working is easier and more
effective than ever." He claimed that it reflected her lack of
trust in employees, who should be able to deliver work remotely
without supervision.
But it's not all tough talk -- Mayer has provided free food at
company cafeterias and handed out iPhones and Android phones to
employees in lieu of BlackBerry phones. The free-food policy has
resulted in larger crowds eating together and animated
discussions which will hopefully spark much-needed ideas. The
result is that the external perception of Yahoo is beginning to
change. The company is now receiving job applications from
workers at rivals Facebook and Google.
While the uproar over her new policy may be diverting attention
from the key challenges that Mayer faces, it is important to
define the company's mission in the medium term urgently. For
instance, is Yahoo a media company, competing with the likes of
Amazon.com Inc.
(
AMZN
)?
Mayer has chosen to call Yahoo a technology company. However,
it continues to act in a manner which is closer to its earlier
definition of a digital media company, such as partnering with
NBC Sports and Wenner Media.
Meanwhile, Yahoo has decided to prune the number of mobile apps
it offers from 60 to 12. The idea is to merge apps into each
other and reduce the number of apps which users have to download.
The company's Flickr photo sharing site has also been upgraded.
Users can now tag friends using the @ symbol. High resolution
photo displays and quicker uploads are some of the other key
changes.
Though the company remains far behind Facebook and Google, Mayer
is clearly taking Yahoo into a new era. This is reflected in its
upward stock price. Only time will tell whether "tougher"
internal moves like abolishing work from home will help Yahoo
recuperate.
AMAZON.COM INC (AMZN): Free Stock Analysis
Report
FACEBOOK INC-A (FB): Free Stock Analysis
Report
GOOGLE INC-CL A (GOOG): Free Stock Analysis
Report
VIRGIN MEDIA (VMED): Free Stock Analysis
Report
YAHOO! INC (YHOO): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment
Research