A significant Yahoo shareholder recently encouraged the company to merge with AOL, a move that could not only deliver up to $1 billion in "cost synergies" for the company, but also generate big bucks for Yahoo CEO Marissa Mayer.
In a letter sent to Mayer on Friday, Starboard investment management firm said that Yahoo is "deeply undervalued relative to the sum of its parts," and that it believes merging with AOL could cut overhead costs, as well as reduce cost overlaps in its display advertising businesses.
Starboard criticized Yahoo for spending money on expenditures and not getting any results or earnings profits.
"Importantly, we believe the combined entity would be able to more successfully navigate the ongoing industry changes, such as the growth of programmatic advertising and migration to mobile," said Starboard. "In addition, we believe a combination could also lead to revenue growth opportunities given the broader user base, higher quality content, better technology assets, and enhanced relationships with advertising agencies."
Mayer responded with a statement Friday, saying "we will review Starboard's letter carefully and look forward to discussing it with them," reported Fortune.
As USA Today noted, if a merger does occur, and there is a change of control among top executives, Mayer could receive quite a hefty sum in payoff kicks.
"At Yahoo, the payoff kicks in if there's a change of control at the company and the executive loses a job within a year of the change," stated USA Today.
"The first part of the Yahoo change-in-control payout would be an an award of two years of base salary, which for Mayer would be $2 million. Her base salary in 2013 was $1 million. She would also get reimbursement for the expenses to find another job, up to $15,000," adding that Mayer's medical and dental plan coverage would continue for up to 24 months.
USA Today estimated Mayer's total pay package for 2013 was valued at $25 million, including "$8.3 million from stock awards, $18.8 million from option awards, and $1.7 million in incentive pay."
