All Things Digital

If you are feeling a little déjà vu about the news BoomTown broke this morning about new retention packages and enhanced severance benefits for Yahoos, in order to keep them from bolting in the face of Microsoft’s unsolicited bid (and to give them a payout in case it works), you are not wrong.

According to several execs who contacted me today, this is what Yahoo (YHOO) did in late 2006, when the troubled Internet portal was starting to suffer from drift and its stock was struggling. The solution was “Project Engage,” which was a combination of granting options and restricted stocks units (RSUs).

At the time, employees were given two of each kind, with the stock options and one RSU grant having a longer vesting timeframe (typically several years). The other RSU grant, which is essentially outright grant of stock, actually just vested on Feb. 2, which might explain some recent departures of top talent to new jobs.

Said one exec: “Everyone was just biding their time for the RSU to vest and the Microsoft bid just gives everyone an excuse to leave, because it is hard to imagine wanting to work for Yahoo if it gets forcibly taken over.”

The new Yahoo retention packages would again presumably help hold onto talent, if the deal does not go through, while the enhanced severance would give them a comfy escape route if Microsoft (MSFT) takes over.

As an added benefit to Yahoo, which is seeking to escape Microsoft’s embrace, it will make acquiring Yahoo even more pricey for Microsoft. In addition, if it wins Yahoo, the software giant will still have to hand out even more retention benefits to stave off an exodus.

In a follow-up to BoomTown’s story, Kevin Delaney of The Wall Street Journal has more details of the severance plan, which will cover all employees even if they are laid off due to a change of control at the company.

Yahoo CEO Jerry Yang alerted employees to the severance benefits plan in an email Friday, promising specific details would be available to staff today, the story said.

The Yahoo board meeting, via phone, went off today without a resolution, as BoomTown surmised in an earlier post today.

See this report on the telephonic meeting from our excellent reporting colleagues at The Wall Street Journal, Kevin Delaney and Matthew Karnitschnig.

As you can see, the breathless reporting that Yahoo’s fate was to be decided today was, shall we say, a bit premature, and Microsoft will have to wait a bit longer to claim its prize.

Of course, as we also noted, it is unlikely Yahoo will have many options other than Microsoft, given that none seem viable.

That includes the threat of doing a deal with Google to take over its search-ad business.

As BoomTown noted:

But the Google threat is just that, claim sources close to Microsoft–-a threat that is relatively empty given that it still carries with it all the monopoly issues related to Google’s dominance over the search market if struck. If Google takes over Yahoo’s search business, the thinking goes, it might as well buy the whole company, given that the regulatory headaches are the same.

Google will argue, of course, that an independent Yahoo is free to pick whatever partner it wants, if it decides to outsource its search-ad business, without noting that the pickings are pretty slim.”

And getting slimmer.

(And here’s a very good email Silicon Alley Insider’s Henry Blodget penned for Yahoo CEO Jerry Yang to send out to the troops, which would be a step in the right direction.)

Please see this disclosure related to me and Google.

Don’t miss a terrific Wall Street Journal profile of Yahoo’s new non-executive Chairman Roy Bostock, penned by the always excellent Kevin Delaney in today’s paper. The longtime ad exec definitely has his work cut out for him, given Microsoft’s unsolicited $31-per-share bid last week.

Delaney outlines the stakes for Bostock, who was installed only minutes before the Here’s-Johnny! call from Microsoft CEO Steve Ballmer, demanding to buy Yahoo for $44.6 billion or else. Bostock replaced former CEO Terry Semel, who got out of Dodge just in time. And, within minutes, Bostock apparently improved Yahoo.

Wrote Delaney:

Microsoft’s offer carried a 62% premium over Yahoo’s recent share price when it was extended. As Yahoo’s directors absorbed the offer that day, someone in the room joked that Mr. Bostock had been chairman for only half an hour and had already increased the company’s value more than 60%, says a person familiar with the matter.”

Well, that’s a plus. Kind of. OK, not so much.

(Here’s a post I did about all the Yahoo board members last week, ahead of its earnings call.)

Yes, indeedy, this is about as insider as you get in Silicon Valley. But we are just addled enough by all the spiked eggnog we drank this weekend to think you might be interested in this video we did at a variety of industry holiday parties BoomTown attended.

They include a stop at angel investor Ron Conway’s Pacific Heights (San Francisco) apartment, where we talked to Ron, entertainer and entrepreneur MC Hammer, blogger Om Malik and The Wall Street Journal’s Kevin Delaney.

Then, a visit to investor Ram Shriram’s home in Woodside, Calif., where VC James Joaquin and YouTube’s Chad Hurley are harangued by our Flip camera.

And also, a sojourn at the downtown San Francisco abode of Google’s Marissa Mayer, where we interfaced with her, as well as Google’s Sergey Brin, WSJ’s Rob Guth and, yes, someone we can only call Hot Santa.

No surprise, but BoomTown just could not resist that one.

Here’s the video:

Please see this disclosure related to me and Google.

The Wall Street Journal’s Kevin Delaney had a nice round-up story yesterday about the slowness of Yahoo CEO and co-founder Jerry Yang’s 100-day Vision Quest to turn around the company, a story we have covered obsessively in this blog.

The summary: Not much change coming for the company, which Yang promised to clean up, noting there were “no sacred cows.” And that means the stock will likely continue to languish, which–as I wrote about in this post–could be dangerous if it starts to drift well below $20 a share. It is now just above $23.

The piece also repeated one consideration Yang was making to outsource its search-ad business to Google, news of which appeared in BoomTown a month ago.

As I wrote then:

According to rumors circulating around the company, Yang and other executives at Yahoo are even considering something as massive as offloading some of its search monetization business to rival Google.

“I have suggested this option here in this column many times. Such a move, even if done in part, could instantly add a whole lot of dollars to its bottom line, drastically cut tech costs and remove the focus on its constantly losing fight with Google as a tech leader.

“Better still, it would put Yahoo in a position to focus on its more competitive assets, such as outstanding media properties like Answers, Flickr and a range of tools and features that Yahoo does better than Google and many others…

“While the idea might seem ludicrous, given how much time and effort Yahoo has put into redoing its search monetization system, which is just now showing stronger results, if true, it is interesting that the company is considering its options as broadly as this.

“In fact, despite their much-hyped rivalry, Google and Yahoo have met many times on this issue, said sources, about what such an arrangement would look like.”

But guess what, according to Delaney? Yang decided against such a move. Another cow spared!

Other than that, it’s pricey think-deep-thoughts consulting and now a playing down of that 100-day declaration. One irony: Neither the cows nor the 100-day promise were supposed to be in Yang’s script for that second-quarter investor conference.

But Yang added them at the last minute to the horror of some advisers who thought it dangerous to make such claims he would be called on later to back up.

And still, Yang is not talking to anyone, except for allowing the company spokeswoman (Hi, Jill Nash!) to make the following deftly meaningless statement in the Journal article:

“Jerry Yang and Sue Decker are committed to making significant changes to the way Yahoo operates, and to sharpening its focus on key initiatives that will enable the company to improve its performance and strengthen its position as the most open, vibrant online marketplace for consumers, advertisers and publishers.”

But here’s the true factoid in the story that riveted me: “Yahoo’s 463 million users world-wide at the end of last quarter represent a massive audience it can tap for ad dollars.”

As one top Yahoo employee said to me recently about Yahoo’s amazing audience size and, as I have said many times, its many excellent products: “If we can’t figure out a way to make a lot more money with that kind of traffic and reach, we all should pack it in.”

And don’t miss our video from yesterday with a panoply of Silicon Valley players giving advice to Yang (WSJD: What Should Jerry Do?) that sounds pretty good after Delaney’s report, which is reposted below:

Please see this disclosure related to me and Google.

Please see this disclosure related to me and Google.

Given all the management upheaval at Yahoo, it is nice that The Wall Street Journal’s Kevin Delaney focused his attention on what might someday come for the current leader, Google, which gets to be the can-do-no-wrong company of the moment, a status Yahoo used to own.

In a story appearing today, Delaney writes about what I have seen happen to every Web company I have covered as they grow larger and ever more powerful: More people leave for start-ups in search of more money, more exciting opportunities and, most important, more impact.

Giving several examples of young entrepreneurs who have bugged out from Google on their own or to even hotter companies like Facebook, Delaney pens a classic tale of Silicon Valley, where restlessness is like breathing.

That’s one of the things that makes the industry so vibrant, and also a bit unstable.

Google execs pointed out to Delaney that the company’s attrition had stayed steady at under 5%, has a 90% acceptance rate of its job offers and is on track to get 2 million resumes this year.

But sheer numbers and the attraction to other companies of picking off a Googler, as well as many employees now vesting their options, means it looks more like the vaunted cafeteria there (and the raft of other almost ridiculous perks) will not be exerting as big a pull as it used to.

Google now has about 12,000 employees, compared to when I met co-founders Sergey Brin and Larry Page many years ago.

While Google still had really great food then, there were only a hundred or so employees and it was the company that poached from the shooting stars, like Netscape, Sun and others.

And, of course, the then-hot Yahoo.

I recall one lunch where Page–always more of a worrywart than the laid-back Brin–mused about how to make the Google experience even more attractive and give employees more leeway, especially if the company decided not to do a public offering.

Now, of course, as one young techie in the Journal article noted about the image the company is developing with some engineers: “They just assume Google is now ‘the Borg,’ now ‘the Man…’ ”

That’s just wrong. Actually, it’s the Goog.