- REUTERS/Elijah Nouvelage
Yahoo CEO Marissa Mayer will not be paid her 2016 bonus, worth as much as $2 million, following the results of an internal investigation into the company’s handling of massive hack attacks that affected more than one billion of its users.
Yahoo General Counsel Ronald Bell is also resigning, the company said on Wednesday. He will not be paid any severance.
Yahoo, which is due to be acquired by Verizon in a $4.48 billion deal later this year, said it had concluded that “certain senior executives did not properly comprehend or investigate” major security breaches suffered in 2014.
The company concluded back then that a state-sponsored actor had accessed certain user accounts, making off with user names, dates of birth, email addresses and other information. Yahoo did not publicly reveal the security breaches, which affected more than one billion user accounts, until the fall of 2016.
While Yahoo notified 26 users that were “specifically targetted” by the hack in 2014, and consulted with law enforcement, the the company said in its review on Wednesday that:
“The Committee found that the relevant legal team had sufficient information to warrant substantial further inquiry in 2014, and they did not sufficiently pursue it. As a result, the 2014 Security Incident was not properly investigated and analyzed at the time, and the Company was not adequately advised with respect to the legal and business risks associated with the 2014 Security Incident.”
The lackluster response also meant that Yahoo’s board of directors was not adequately informed of the “full severity, risks, and potential impacts” of the situation.
Still, though Yahoo’s response was not sufficient, the independent committee did not conclude that there was”intentional supression” of the information, Yahoo said on Wednesday.
Mayer, a former Google executive who took the reins of the troubled Yahoo as CEO in 2012, is entitled to an annual bonus of 2 times her $1 million annual salary. The exact amount of the bonus depends on various personal and company-wide performance goals.
Mayer also said she will voluntarily turn down her annual bonus and equity grants for 2017 as a result of the incidents. Under the terms of Mayer’s 2012 hiring contract, she is entitled to a performance-based equity award of no less than $12 million every year.
The hacks at Yahoo caused Verizon to lower its offer to buy Yahoo by about $350 million. The sale is expected to close this spring. Yahoo noted in its annual report on Wednesday that it spent $16 million in legal fees and forensic investigation costs in 2016 in its efforts reviewing the matter.
Yahoo said in its annual report that it could face criminal penalties in connection with the incident, as various government agencies look into the matter. And the company said it is also 43 putative consumer class action lawsuits because of the hacks.
Here’s the statement Mayer made on her blog on Wednesday:
“As those who follow Yahoo know, in late 2014, we were the victim of a state-sponsored attack and reported it to law enforcement as well as to the 26 users that we understood were impacted. When I learned in September 2016 that a large number of our user database files had been stolen, I worked with the team to disclose the incident to users, regulators, and government agencies. However, I am the CEO of the company and since this incident happened during my tenure, I have agreed to forgo my annual bonus and my annual equity grant this year and have expressed my desire that my bonus be redistributed to our company’s hardworking employees, who contributed so much to Yahoo’s success in 2016.”