Even after Yahoo goes through with the sale of its core business, it will still pay its top executives handsomely—and in some cases, even better than it did before.
In announcing a plan for the company's future Monday, Yahoo (yhoo) said it had picked a new CEO to replace Marissa Mayer once its deal with Verizon (vz) officially closes. Yahoo is selling its technology and advertising business to Verizon, and the remaining company will consist only of the hoard of Alibaba (baba) stock that Yahoo owns, its stake in Yahoo Japan, and a miscellaneous array of smaller investments.
Running the leftover stump of Yahoo is likely to be a much simpler and easier job than the one Mayer had, from which she is walking away with a $23 million severance package. Add to that the $69 million worth of unexercised stock options awarded to Mayer, plus the $97 million of Yahoo stock she already owns (which she'll be free to sell when she leaves the company), and Mayer's net worth is set to increase by about $189 million. (That's even after she voluntarily gave up about $20 million of her annual stock bonus this year after taking fire for the cyber attacks Yahoo recently suffered. It's also significantly more than Fortune's estimate two months ago of $141 million for Mayer's total payday, thanks to new equity grants and stock price appreciation in the meantime.)
But Mayer's replacement, Thomas McInerney, seems in many ways to be getting an even sweeter deal. McInerney, the former chief executive of IAC (iac) (the Internet media company once known as InterActiveCorp, which owns dating sites including Match.com (mtch)), will get a starting base salary of $2 million to become Yahoo's new CEO, according to the offer letter made public Monday. That's double the $1 million base salary that Mayer currently takes home.
What's more, Yahoo actually expects to pay McInerney $4 million in his first year working at the company, assuming he earns his target bonus, which is equal to his base salary, according to the new disclosures. That's 25% more than the $3 million the company is paying Mayer for a salary and cash bonus this year. On top of that, McInerney will also be eligible for grants of long-term incentive rewards of up to $24 million, depending on achievement of performance goals. If he were to receive the maximum amount, it would also be twice as much as Mayer's long-term incentive grant in 2015, the last full year before the Verizon deal was announced.
Setting aside any discussion of the gender wage gap, McInerney's compensation is all the more remarkable when you take into account his job responsibilities following the Verizon deal. While Mayer was hired to tackle the herculean challenge of turning around Yahoo's struggling media business—a seemingly impossible task, in hindsight, at which she ultimately failed—McInerney will collect a paycheck for what may practically be a no-show job.
After all, the company that McInerney will run will not be an operating business like the one Yahoo is today, but rather an investment company not all that different from a mutual fund. In fact, Yahoo has already begun referring to the future version of itself, which will be renamed Altaba, as simply "the Fund." Yet unlike most funds, the Yahoo/Altaba incarnation (which will still trade like a stock under the ticker symbol "AABA"), will not buy any new stocks, and it "does not intend to sell" the Alibaba stock or Yahoo Japan shares it already owns, according to the disclosure.
In short, McInerney is getting paid a huge amount to sit atop a fund that basically runs itself. The way Yahoo describes McInerney's responsibilities in a filing Monday makes it sound like he will be little more than a glorified trustee, the way a retiree might occasionally check in on the status of the family nest egg. The Altaba fund will "depend" upon the executive team "for the monitoring of the Fund’s investments," according to Yahoo's disclosure, but it's unclear how much of a time commitment that "monitoring" will require. One portion of the fund—the part consisting of marketable debt securities, which may require more active management—won't even be managed in-house, but outsourced to a third-party investment advisor, Yahoo said.
A spokesperson for Yahoo declined to comment, but a source close to the company says that besides usual fund management responsibilities, McInerney will be charged with untangling Altaba " out of a long and significant tail of Yahoo operating company liabilities," from class action lawsuits over the data breaches to "ongoing dialogues with regulators."
The Altaba fund will oversee assets currently valued at more than $60 billion, including more than $40 billion worth of Alibaba stock. By comparison, BlackRock (blk), which oversees more than $5 trillion in assets—most of which are also in passive funds, not actively managed—paid its CEO Larry Fink a base salary of $900,000 in 2015, less than half of McInerney's starting salary, and total compensation of $26 million for the year. Bill McNabb, CEO of passive fund giant Vanguard, which has some $3.8 trillion in assets (but is not a publicly traded company), received $10 million to $15 million in 2015 compensation, according to Bloomberg.
Besides managing—or even just monitoring—far more assets than Altaba will, BlackRock and Vanguard also have another distinguishing factor: They are complex businesses with their own products and operations spread across the world. Ultimately, BlackRock and Vanguard's executives are accountable for their own companies' performance. McInerney, on the other hand, may very well be paid as though he were responsible for Altaba's performance. But ultimately he won't be: That will depend almost entirely on Yahoo Japan and Alibaba, on whose coattails McInerney will be riding.
Clarification: A previous version of this article referred to McInerney's long-term incentive rewards as stock grants. While such compensation is typically awarded in some form of stock that vests over time, Altaba has yet to establish what form these rewards will take. This article has been updated accordingly.