Great ResignationDiversity and InclusionCompensationCEO DailyCFO DailyModern Board

Did Yahoo’s Great Gatsby Holiday Party Go Too Far?

December 16, 2015, 10:19 PM UTC

After a stressful year at work, a bountiful holiday party is just the thing for unwinding with colleagues and celebrating the end of a successful year.

But in the case of Yahoo (YHOO), CEO Marissa Mayer may have gone too far. Eric Jackson, an investor in the company, claims that the recent 1920s-themed gala cost $7 million, CBS San Francisco reports. Others dispute that figure, but based on images of the party, it’s clear that Jay Gatsby himself would have been impressed.

There’s nothing inherently wrong with a big blowout. A December celebration is the one time of the year when employees at every level of an organization are invited to share in a company’s good fortunes. But as Andrew Ross Sorkin recently noted in the New York Times, Mayer has come under fire for excessive spending throughout the organization, and there may not be a lot to celebrate there.

“[I]nvestors think Yahoo’s core business, stripped of its investment in Alibaba and Yahoo Japan, is worthless,” he writes. “Actually, Yahoo is less than worthless, as it is now being ascribed a negative number.”

In light of Yahoo’s financial troubles, a spare-no-expense shindig is disturbingly reminiscent of what happened at Tyco. Recall how former CEO Dennis Kozlowski played fast and loose with company money, as an episode of CNBC’s American Greed reveals: $4 million for an Impressionist painting, $6 million for a birthday party, and (most infamously) $6,000 for a shower curtain that couldn’t have been any more effective than the one decorated with a world map that I bought for $20 from Bed, Bath and Beyond. (Besides being cost effective, that one also provides a helpful geography lesson every time you take a shower.)

Roulette!! #roaringyep #yahoo #party #mystudentsarethebest #sf #bayarea

A photo posted by キラキラ✨ (@sukoshi33kyra) on

There are useful guidelines for how companies can throw bashes that are both stylish and fiscally appropriate, and they’re found in the companies’ own codes of conduct. Organizations committed to the highest standards of ethics often have a statement like this in their codes: “It’s important for everyone in the organization to avoid even the appearance of unethical behavior.”

Consider these examples from businesses that the Ethisphere Institute considers among the world’s most ethical:

—Dell: We avoid even the appearance of impropriety.

—Dun & Bradstreet: We need to avoid any situation that creates even the appearance of a conflict of interest.

—The Hershey Company: Be particularly careful at industry association meetings or events to avoid even the appearance of unfair business practices.

Although Yahoo does not appear on Ethisphere’s list this year, the company does include the following statement in its code of conduct: “Each of us must avoid any situation that may create or appear to create a conflict between our personal interests and the interests of Yahoo.” Elsewhere, in a section entitled “Exercise Good Judgment,” employees are asked to do the following:

When faced with a situation that is not covered in the Code, consider your action in light of the following questions:

  • Is it ethical?
  • Is it legal?
  • Is it consistent with Yahoo’s values?
  • Does it comply with our Code of Ethics or other company policy?
  • Would you feel okay about it if it was reported in the media or communicated to management? Your peers? Your family?
  • Does it protect both Yahoos short-term and long-term interests?
  • Would you be able to look your manager or CEO in the eye and say you did the right thing?

If you can answer “yes” to all of these questions, then the decision to move forward is probably appropriate. If you’re not sure, consult with your manager, the Legal Department, or the ECO for guidance.

For the sake of discussion, let’s assume that the Yahoo party cost a third of the $7 million figure that investor Jackson claims. That’s still a lot of money to spend on such an occasion, even if it’s legal to do so. Given the financial woes that Sorkin details and Yahoo’s recent history of extravagant spending, would it not have made more sense for Marissa Mayer to err on the side of conservatism?

#roaringyep will next year be the same?

A photo posted by Lin Liu (@liulinthu) on

Besides, as Mary Kelly, CEO of Productive Leaders, points out, “Higher taxes and higher healthcare costs have hit working people hard. While a fabulous party may be fun for some employees, there is no doubt others would, especially in tough economic times, rather have the cash that the company would otherwise spend on a lavish party. Extravagant celebrations make senior management appear out of touch with what their employees truly need.”

There’s a reason why “less is more” is a cliché. Sometimes, as is the case with end-of-the-year hullabaloos, clichés are true.