Yahoo: Three Weeks Away From Next Mass Exodus

We have been tracking the exodus of employees from Yahoo and have counted 114 executive-level departures since January 2007. The news isn’t going to get any better as we have learnt that of the executives remaining at the company, a large number of them are biding their time and waiting for a large vesting period that finishes up in the first week of August, the same time as the critical annual shareholder meeting.

The options grant was part of a retention initiative at Yahoo! and involved almost every employee at the company – from top executives down to the engineering level. Employees were granted options and restricted stock units based on merit. Grants ranged from 10,000 to up to 40,000 options with a vesting period of two years. These options are potentially worth up to $200,000 for some employees – certainly enough incentive for some who intended to leave to wait around a few more months before taking that new job with a startup, or Google or Microsoft. We understand that there are dozens and possibly up to another 100 people in director, VP level or higher positions who are ready to leave once this vesting period has completed in a few weeks time.

Yahoo has long had a retention problem, and they are known to pay higher base salaries and ocassionaly write out bonus options in an effort to retain employees. They also ran a very visible recruitment campaign until recently when they initiated a hiring freeze. Our list of executives who have left the company could easily double in the next month – and another mass exodus would not bode well for the morale of the remaining employees and executives.

We understand that some of these remaining executives are only coming into the office a day or two a week, and openly searching for new jobs with competitors or other companies. The image gives a good idea of just how tough the situation inside Yahoo! is at the moment – and the challenges facing upper management with their attempts to turn the company around without the help of Microsoft.