Former Yahoo CEO Carol Bartz received a compensation package valued at $16.4 million in her final year on the job, including a $3 million severance payment after the troubled Internet company abruptly fired her last September.
Bartz, now 63, stands to make even more from the nearly 386,000 shares of restricted stock and nearly 416,000 stock options that vested upon her ouster, according to a Friday regulatory filing from Yahoo Inc. Options and awards she got earlier in the year tallied at $12 million.
She also could still reap a windfall from 5 million stock options that she received when the company hired her in January 2009. None of those 5 million options have vested because Yahoo’s stock hasn’t yet hit any of the required price targets.
Retaining the rights to that restricted stock and stock options means Bartz has a huge incentive to root for her successor, Scott Thompson, to come up with a turnaround plan that lifts Yahoo’s long-slumping shares.
Yahoo disclosed in previous filings with the Securities and Exchange Commission that Thompson is starting his first year as CEO with a pay package likely to be valued at $27 million to $28 million, depending on the size of his bonus.
Most companies set the date for their annual shareholder meetings when they file the documents detailing their executives’ compensation. But Yahoo didn’t do that because it is facing a challenge to its board of directors from one if its largest shareholders, hedge fund Third Point.
The fund’s manager, Daniel Loeb, is seeking a board seat for himself and two allies who contend they would serve shareholders better than Yahoo’s appointees. Yahoo contends it already has ushered in a new era by adding six directors, including Thompson, since the beginning of the year.
Company co-founder Jerry Yang left the board in January, and four other directors, including Chairman Roy Bostock, intend to step down whenever the annual meeting is held.
The last time Yahoo faced a disgruntled shareholder’s attempt to shake up its board in 2008, it delayed the meeting until August. The company, which is based in Sunnyvale, California, usually holds its annual meeting in late June.
Bartz’s inability to snap Yahoo out of its financial funk is one of the reasons Loeb and other shareholders are frustrated. Despite her foibles, Bartz received compensation packages valued at nearly $76 million in all during less than three years as CEO.
Last year’s package of $16.4 million represented a 37 percent increase from 2010′s package of $11.9 million.
In 2009, Bartz ranked among corporate America’s best-paid CEOs with a package valued at $47.2 million.
Most of her pay has hinged on Yahoo’s stock price. For instance, Yahoo estimated the 5 million unvested stock options that Bartz received in 2009 could eventually be worth $27.2 million.
But they won’t vest unless Yahoo’s reaches at least one of several goals before 2013. About one-third will vest if Yahoo’s closing stock price averages at least $17.60 for 20 consecutive trading days. The rest of the options will vest at average prices from $20.53 to $35.19.
Yahoo shares added four cents Friday to close at $15.57. The stock hasn’t traded above $20 since September 2008.
Even if the 5 million options never vest, Bartz has prospered from other grants that she received during her rocky tenure. For instance, last year she realized a $6.5 million gain by exercising more than 462,000 other stock options that had vested, according to Friday’s filing.
She also received $735,025 in salary in 2011, along with a $477,534 pro-rated cash bonus.
The documents also disclosed that one of Bartz’s top lieutenants, Blake Irving, will receive a $4.9 million severance package when he leaves the company as chief product officer at the end of this month. Irving qualified for the package as of Dec. 31.
The Associated Press formula calculates an executive’s total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.
The value that a company assigned to an executive’s stock and option awards for 2011 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value.
However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company’s stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.