Yahoo CEO Bartz to receive $1 million salary

Yahoo's newly named CEO, Carol Bartz, will receive a base salary of $1 million a year, along with a stock grant of 5 million shares. Total package is valued at $19 million.

Dawn Kawamoto Former Staff writer, CNET News
Dawn Kawamoto covered enterprise security and financial news relating to technology for CNET News.
Dawn Kawamoto
2 min read

Updated at 5:20 p.m. PST, with comments from executive recruiter Jon Holman.

Yahoo is providing its new CEO, Carol Bartz, with a $1 million base salary, as part of a lucrative $19 million compensation package for the former Autodesk executive, according to a filing Thursday with the U.S. Securities and Exchange Commission.

Under the four-year employment contract, Bartz, 60, will also receive an annual equity grant valued at approximately $8 million in February, the filing stated. This grant will be doled out at the same time other Yahoo executives receive their annual equity grants.

And like most executives who leave behind unvested stock options to take a new job, Bartz will also be compensated for forfeiting her stock grants and post-employment medical coverage that she left behind at Autodesk. That compensation will come in the form of $10 million, with a quarter of it paid in cash and the remainder in Yahoo restricted stock that will vest through 2009.

In addition to her $19 million compensation package, Bartz will also be eligible for an annual bonus of up to $4 million above her base salary, if she hits certain targets, according to the filing.

"This compensation package is maybe a little on the rich side, but it's definitely not out of whack," said Jon Holman, who heads the executive recruiting firm The Holman Group.

Given that Yahoo is a turnaround situation and a multibillion-dollar company, Holman noted, Bartz's compensation package is relatively in line for a CEO of her caliber.

Bartz may also be eligible for 5 million Yahoo shares, if she can get the company's under-pressure stock price to rise a certain percentage within the next four years. Bartz will have a seven-year period to cash in those eligible shares.

But there is one aspect of the 5 million share payout that is unusual, Holman noted.

Under the employment agreement, Bartz can potentially walk away with no vested options after a four-year period, or a tidy sum of more than $100 million, if the exercise price were set today at $10 a share.

The compensation plan calls for Yahoo's stock to increase by a certain percentage at various intervals over the four-year period. But the unusual part of the plan is that the shares will not vest at all, if the stock does not reach those various levels.

Typically, stock options will vest, regardless of the trading price, on a scheduled basis. The vesting, however, may accelerate, or the number of shares eligible for vesting may increase, if an executive is able to achieve and maintain a company's stock price at a particular level.

But under Bartz's compensation plan, she could theoretically walk away with none of the 5 million shares vesting, Holman noted.

"This provision, while not unheard of, is not common," Holman said.