When you buy a stock, you are an owner and one of the votes you have is executive compensation. Depending on the size of the company, the ownership of the stock some votes are more important than others. In mid June, Ian McGugan examined Yahoo’s Marissa Mayer. When she was hired for the job, she was high profile and expected to turn the company around and was given generous stock options. The company was sold to Verizon Communications Inc and the stock options for the next President will be less. Ms Mayer had a $23 million severance package (which is likely more reasonable) but stock options both restricted and unrestricted of $236 million according to CNN.

The big question was she worth $236 million? The biggest reason for the rise in stock price is two holdings 15% in Alibaba of China and 35.5% of Yahoo Japan. The rest of the company the profit went from $3.31 a share in 2012 to a loss of 23 cents in 2016. However due to the two big holdings the stock price tripled while Ms Mayer led the company. Should people be rewarded for being lucky?

Mr. McGugan raises the question because there is no good reason why Ms. Mayer should leave the company with $250 million and others in the company leave with so much less. What value did she achieve? There is no good answer, but this example was one of those what seem to stick out why is executive compensation so high relative to the rest of the workforce? The compensation consultants and directors reasoning does not seem to work.

Linking to dividend paying stocks, as long as the company is making money compensation while extraordinary important inside the company is not that big of a deal to shareholders. When the company loses money, the knives come out very quickly.

There are more questions than answers, till the next time – to raising questions.