Is $450 million too much money to spend on free food for Yahoo! employees?

Is $450 million of free food too much for Yahoo! employees?Is $450 million of free food too much for Yahoo! employees?

Oh my, Yahoo! is in the news again and all for the wrong reasons… again.  Not too long ago after Yahoo! CEO, Marissa Mayer, decided not to spin off the Alibaba stake which accounted for the majority of the company’s market valuation, she is in hot water with another activist shareholder, Eric Jackson of SpringOwl Asset Management.

In his scathing 99-page presentation that he submitted to Yahoo’s board he calls for a turnaround plan that would keep Yahoo! intact and is superior to any other activist hedge fund managers, notably, Starboard Value LP,  that just wants to break up Yahoo! and sell it on the cheap.  Eric’s plan which was posted on Wall St Journal will deliver $113.41 per share compared to Starboard Value LP, $39.41 per share.  That is a difference of $61.45.  In this case it would absolutely make sense to move forward with Eric’s plan.

However to achieve Eric’s plan, a few things have to happen, one of them is to get rid of Marissa Mayer, reduce employee headcount from 11,0000 employees to about 2000-3000, sell some real estate assets, get rid of unnecessary perks — the most ridiculous being $450 million spent on free food for Yahoo! employees.

In the four years Yahoo! spent over $450 million on free food.  Let’s break that down ($450,000,000/4 years) = $112, 500,000/ year; $112,500,000/11,000 employees = $10,227.27 per employee

Assuming they are working 52 weeks or 208 days, that works out to $49.17($10,227.27/208) per working day for each employees.  It is no wonder Yahoo! is not very profitable when employees eat like a king and get paid millions for doing nothing to increase shareholder’s wealth.

The first major hired by Marissa Mayer was Henrique de Castro who served as the Chief Operating Officer of Yahoo! from November 2012 to January 16, 2014 is one example of doing not much for big, big, big, big returns for him.  Henrique did not work out and he was eventually let go with a golden parachute to the tune of $109 million. Ouch!

As the shareholders are starting to revolt against the Marissa Mayer’s led ship, we can say that it may not be long until she is out the door.  Even if she does get fired, don’t feel too bad for her cause she is going to get a big, big, big, big golden parachute as well.  See the theme here yet.

We love to hear from you and what you think, take the poll and add your comments.

Is $450 million too much money to spend on free food for Yahoo! employees?

 

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