When it comes to researching stocks, I spend the bulk of my time trying to value companies. I use a variety of methods, from discounted cash flows to comparables to throwing a baseball at a calculator and using whatever numbers it hit. All methods have worked at one time or another. But one thing I have not done is to try and value a person... financially. Yahoo!
Mirror, mirror on the wall...
...how much is Marissa Mayer worth to us all?
Well, let's find out. So, after stock options and hitting performance targets, Mayer will be paid around $20 million a year. Let's use the comps model to kick things off. Apple
In Tim Cook's first year, revenues went from $6.523 billion to $10.824 billion. That's around a 66% gain. Nice. Using some pseudo-math, Cook was paid around $5,699,697 per 1% gain in revenues.
Now, with Mayer making $20 million, give or take, she would be worth her weight in Cook-dollars if the company were to gain about 3.5% in revenues for her first year. Well, that sounds quite doable.
Obviously, Tim Cook's pay was absurd. So let's go to 2011's second-highest-paid tech CEO, Larry Ellison of Oracle
As you may have heard by now, Marissa Mayer comes from the now debatably labeled "tech" company Google
My feelings on Google Maps are mixed. In a way, it is an awesome service. While driving at 80 mph down the interstate, I can simply look down at my phone for a few minutes and find a Five Guys for some quality roadside dining. It's amazing.
On the other hand, if you are in any kind of densely populated area, or moving faster than the speed of smell, Google's location services tend to place you about two streets over from where you actually are. What kind of idea was that?
I like that I can type "goldfish enthusiasts club" in the search bar, and Google finds me all of the goldfish enthusiast clubs within a 10-mile radius. Those are otherwise difficult places to come across.
All in all, I would give Mayer a solid "B" as the leader of the Local, Maps, and Location Services division of Google. And compare that to Steve Ballmer, whom I have given a "G" in all categories.
The Mayer of Yahoo!
Marissa Mayer may be just what the activist investor ordered for Yahoo!. She is getting nearly twice what Carol Bartz was given for the gig, but Bartz also was a disappointment. What I like about Mayer is that she has a strong product background and worked in a company -- and specifically a division within that company -- that was able to monetize the search game quite successfully.
Yahoo! fell behind a few years ago -- it lost its edge. Many investors, and more important, users, have turned their backs on the service. With the company in such dire circumstances, the timing is perfect for a savior. Mayer has the opportunity to walk into a dinosaur of a company and turn it into an IBM. This is a leader's dream.
Say what you will about the company as it exists today, but I am excited for the future. And the future, as we have modeled, hasn't come at too high a price.
Many of the major Internet service companies are in better positions than Yahoo!, I admit. While I have my problems with some of the business models emerging from the latest batch of technology innovators, I have to agree with our analysts on one of them. In this free report, the Fool has identified one recent tech IPO that will blow the others away, and it's not Facebook. Read it here. Or to get the scoop on one tech company that's clicking on all cylinders, click here to pick up your copy of the Fool's brand new premium research report on the iEverything powerhouse, Apple.
Fool contributor Michael Lewis owns none of the stocks mentioned in this story. The Motley Fool owns shares of Oracle, Apple, Google, and Facebook. Motley Fool newsletter services have recommended buying shares of Apple and Google. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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