Verizon Sought $925 Million Penalty for Yahoo's Lax Security
Verizon initially thought the biggest
breaches in internet history merited a $925 million discount on its acquisition of Yahoo's online services, nearly three times more than the two companies finally agreed upon.
Yahoo disclosed new details about its negotiations with Verizon in a regulatory filing Monday. The filing doesn't say why Verizon relented on its original demand, issued on Feb. 1. Verizon ultimately accepted Yahoo's offer to trim the sale price by $350 million instead.
The companies struck a $4.83 billion deal last July, but re-opened talks after Yahoo revealed that personal information had been stolen from more than 1 billion of its users in two separate hacking attacks in 2013 and 2014. The discount reflect concerns that people might decrease their use of Yahoo email and other digital services that Verizon is buying, reducing opportunities to show ads.
Verizon Communications is now aiming to complete the revised $4.48 billion purchase by the end of June.
After that, Yahoo's email and other digital services will become part of Verizon, which is planning to meld the operations with its AOL division in an effort to become a bigger player the growing market for digital ads.
Yahoo's most valuable parts -- investments in China's e-commerce leader, Alibaba Group, and in Yahoo Japan -- will be left in a new company called Altaba. That company will be run by a Yahoo board member, Thomas McInerney, instead of Yahoo CEO Marissa Mayer.
Although she hasn't divulged her plans, Mayer isn't expected to work for Verizon. If she leaves, Mayer will receive a $23 million severance package, according to Monday's filing. The amount is lower than a $44 million valuation disclosed in September because $21 million in stock options and other awards have vested in Mayer's account since then.
Besides her severance package, Mayer will gain control of stock options valued at $56.8 million, according to the filing.
The stock will help ease the sting of a penalty that Mayer is paying for the big data breaches that occurred on her watch. Yahoo's board is withholding Mayer's annual bonus of up to $2 million and a potentially lucrative stock award to punish her.
Besides naming McInerney as Altaba's CEO, Yahoo also filled several other key positions at the new holding company.
Arthur Chong will serve as general counsel and secretary and Alexi Wellman as chief financial and accounting officer. DeAnn Fairfield Work was named chief compliance officer.
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