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I don’t know Marissa Mayer, the recently appointed CEO of Yahoo, but by all accounts she is an extremely talented executive who has proven herself at the highest levels of what has been a largely male-dominated industry – the consumer internet space.  As one of Google’s earliest employees, she rose through the ranks to become a product development leader at the search giant, all the while gaining a reputation as a focused and decisive individual.  This past year she was elected to the Board of Directors of Wal-Mart – further recognition of her prominence as a business leader.  Having said all that, one could view Yahoo’s selection of Mayer as its newest CEO as a shrewd tactical nothing-to-lose decision.

To say Yahoo has fallen upon hard times lately would be an understatement.  The company has become a rudderless ship sailing to the precipice of oblivion, plunging from internet darling to near irrelevance over the past decade. Yahoo was once described as the face of the internet and its stock reflected that description – trading at over $118 in early 2000.  Now, it struggles to create an identity while its stock languishes at $15 a share.  Although it is still a search engine, it cannot compete with the likes of Google, and a series of poor management decisions has resulted in a suite of disparate products that have very little correlation in terms of revenue generation.  In addition to this, Yahoo has been through four CEOs in four years – the latest being a public relations disaster, as CEO Scott Thompson resigned after only four months in the position, after it came to light that he had inaccurate information on his resume.

It is against this rather unstable background that Yahoo’s Board of Directors made its decision to appoint Mayer as its newest CEO.  (Yahoo’s Board recently underwent a significant reorganization with the appointment of four new corporate board members in the wake of a shake-up sparked by Third Point, LLC, a hedge fund which owns about 5.8% of Yahoo.)  The board was faced with two choices for its CEO selection: (1) a traditional (read: older) more seasoned executive; or (2) an outside-the-box candidate.  With Mayer, they chose the way-outside-the-box candidate.  In reality, it can be classified as a nothing-to-lose decision by the board.  If Mayer is successful in placing Yahoo back on the path to internet prominence, the board looks like geniuses.  If, however, Mayer is unable to steady the ship – the board can take the position that this was their last ditch effort to save the ailing company before it sought other strategic options such as merger/acquisition or perhaps a significant paring down of its products. There are many analysts who believe that it did not matter who the board chose for the position, as Yahoo simply cannot be saved. If this turns out to be the case, the board can argue that it had already tried the traditional candidate route with a string of veteran internet executives and the results were all the same — abysmal.  Not exactly a case study in corporate governance best practices, but what did the board have to lose with the selection of Mayer?

There is another dynamic at play with the selection of Mayer that also perhaps illustrates the nothing-to-lose approach by the Yahoo Board.  There has been a very interesting news cycle with this story – in the first 24 hours the story focused on the appointment of a new lead executive at a large company – complete with Mayer’s background, her rise to prominence at Google, the challenges she faces, etc. However, in the 24 hours following, the story turned with the discovery that Mayer is pregnant and how the Yahoo Board was made aware of this during the screening process.  Soon the editorials were filled with kudos to Yahoo and its board for its mature, forward-thinking decision and for not being dissuaded from selecting Mayer, despite the fact that she is expecting the birth of her first child in October.  “Pregnant CEO Breaks Ground” was how one major news outlet framed the story.  Don’t think for a second that Yahoo’s Board did not take this positive coverage into consideration when it chose Mayer.  Did it make the difference?  Probably not; but it sure didn’t hurt.

The next several months will be interesting to watch as Mayer frames her approach to attempting to cure all of Yahoo’s woes.  For Yahoo’s Board, the pressure is finally off of them, and on to Mayer.

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