SUNNYVALE — Giving fresh insight into high-level negotiations, regulatory filings Monday showed that telecommunications giant Verizon wanted to knock off nearly $1 billion from the purchase price of Yahoo after the disclosure of two record-setting data breaches.
That’s nearly three times the discount agreed to in the end.
Meanwhile, the same filing revealed that Yahoo CEO Marissa Mayer will not be in charge of what is left of the company after its primary business is sold to Verizon. Instead, the investment company called Altaba will be headed by board member Thomas McInerney.
Verizon had originally agreed to pay $4.83 billion for Yahoo. But amid the sale process came revelations that the Sunnyvale firm had been hacked twice, with at least a half-billion accounts breached in one incident and more than a billion in the other.
Verizon ultimately agreed in February to pay $4.48 billion, slashing hundreds of millions from the price tag. And on Monday, an SEC filing from Yahoo opened a window into negotiations between the two firms.
On Feb. 1, with an investigation into the hacks underway by an independent committee and Verizon receiving updates, Verizon CEO Lowell McAdam got on a conference call with Yahoo board member McInerney. McAdam laid out three choices: His company could spend several months finishing its evaluation of the deal and then decide how to proceed; Yahoo could grant a discount in exchange for Verizon’s release of claims arising from the data breaches; or the companies could agree to scrap the transaction.
“Mr. McInerney asked Mr. McAdam the magnitude of the purchase price reduction being requested and Mr. McAdam noted that Verizon was still formulating a view but that a purchase price reduction as high as $925 million could be appropriate,” the filing said.
Eight days later, McInerney “informed Mr. McAdam that the (Yahoo) board was unwilling to agree to a purchase price reduction at the high end of the range previously discussed,” the filing said.
It appears the two men came to the final deal that day, with each agreeing to inform his board of a proposal to knock $350 million off the price.
Now McInerney, after playing a key role in the deal, will become CEO of Altaba if Yahoo’s sale to Verizon goes through. The 52-year-old former executive at Ticketmaster and internet company InterActiveCorp is to receive $2 million in annual base salary, double Mayer’s base pay.
He’ll also be eligible for a performance-based annual incentive award of another $2 million, plus “long-term deferred compensation” in the form of a grant of up to $24 million after the sale closes, the filing said.
Altaba would manage about $40 billion in assets in Chinese e-commerce giant Alibaba and $9.6 billion in Yahoo Japan, along with some non-core patents not included in the Verizon sale.
Mayer, 41, would receive a golden parachute of $23,011,325 if she were terminated without cause or left for “good reason” of her own after the deal closed, according to the proxy statement Yahoo filed Monday. That figure is lower than the $55 million or $44 million golden parachutes specified for Mayer in previous Yahoo filings, because the payment is based in part on stock options that have vested since the earlier filings, a person familiar with the situation said.
Whether Mayer will have a role in Verizon remains unclear. Analysts said it was unlikely.
“A lot of questions have been raised about her ability to lead and make decisions,” said CFRA Research analyst Scott Kessler. “There’s no reason for them to bring her over.”
Pivotal Research Group analyst Brian Wieser said it was unlikely a major company would offer Mayer an executive-level job, but he noted she joined Yahoo from Google, where she’d been a highly regarded product management executive.
“Can there be a situation where she could be in a corporate environment and succeed?” Wieser said. “Sure.”
Yahoo and Verizon have said the sale will close between April and June.
Reading this on your phone? Stay up to date with our new, free mobile app. Get it from the Apple app store or the Google Play store.
