Yahoo gets defensive on compensation

May 2, 2016

Friday afternoon was the deadline for those companies on a calendar year to file their proxy statements and on Friday afternoon, we saw a big surge in those filings, with about 150 proxies filed after 4 pm. But some companies chose to file an amended 10-K with proxy-related information (read: compensation), which is allowed under SEC rules and is most common for companies in some state of flux.

Yahoo, which had put itself up for sale as activist investors circled, was one of those companies, filing their amended 10-K just after 5 pm on Friday. As with similar filings, it included the summary compensation chart that is more commonly found in the proxy statement. What was different, however, was the level of defensiveness the company exhibited when it came to justifying what it paid Marissa Mayer.

That’s because before you even got to the table on pg. 44, there were lots of bold type trying to explain why you shouldn’t take the numbers in that table at face value. Here’s a sample from pg. 17:

“our Chief Executive Officer’s actual earned compensation for 2015 was 39 percent of the total reported in the Summary Compensation Table.”

Before you even got to that, the company explained that named executives “received no salary increases or annual bonuses for 2015”.

And just in case you still were distracted by some of the numbers in the summary compensation table, there was a separate chart and corresponding graphic on pg. 16 that provided the back-up math to show that $36 million reported for Mayer in the summary compensation chart was actually “only” $13.9 million.

And, in case you still had your doubts, there was a bar chart on pg. 16 that showed that the 39% realized pay that Mayer received in 2015 was significantly lower than the 60% of realized pay she received in 2014.

To be fair, Yahoo did include a chart on realized pay back in its 2013 proxy. But it wasn’t done in quite the same way. This year seemed more like the proverbial hitting someone over the head with a frying pan approach to executive compensation.

All told, the company devoted nearly 50 pages of the proxy “explaining” its compensation practices.

Given the spate of headlines over Friday’s filing, including stores like this one, which says that Mayer will get $55m to leave the company, it may be easy to understand Yahoo’s defensive crouch on compensation. But that doesn’t make it any less rare.


Are Alkermes Analysts Chasing This Story Too Hard, or Is It Just a Start?

Alkermes PLC (NASDAQ: ALKS) saw its shares surge on Friday after positive news on ALKS 5461 for depression in Phase 3 studies. This was for patients who do not respond to standard care. Shares were up almost 35% at $58.60 earlier on Friday, but Alkermes backed handily off its $59.36 high to close up 27.8% at $55.62.

What stood out to 24/7 Wall St. was that the 14 million shares was almost 14 times normal trading volume. Note also that too many analysts to count jumped on the upgrade or price target hike bandwagon on Friday. Is it possible that analysts are now behind the curve on Alkermes? Or worse, are they chasing their expectations too high?

Alkermes also now has a $8.4 billion market cap and analysts see 2017 as the year that earnings will go to positive.

The study met its pre-specified primary endpoint showing treatment with ALKS 5461 significantly reduced symptoms of depression in patients with major depressive disorder (MDD) compared to placebo. Alkermes now plans to request a meeting with the U.S. Food and Drug Administration’s Division of Psychiatric Products to discuss the filing strategy for this Fast Track designated medicine.

After the stock added $3 billion in market cap at one point on Friday, 24/7 Wall St. wanted to show just how much some of these analyst targets have gone up.

Jefferies already had a Buy rating, but they raised its target to $70 from $62. The firm’s view is that this was the third of three Phase 3 studies to assess efficacy of ALKS 5461. On its success the firm is adding potential ALKS 5461 revenues into its model, but Jefferies did assign a 50% risk discount for regulatory risk.

Leerink had an Outperform rating and raised its price target to $70 from $57. Leerink was surprised by the news, admitting that the firm had been previously cautious on the third Phase 3 as it was challenging to garner much conviction after disappointing results from the prior FORWARD-3 and -4 studies.

Barclays assumed coverage with an Overweight rating and a $66 price target.

Citigroup has a Neutral rating but raised its target to $62 from $53.

Credit Suisse reiterated its Outperform rating but raised its price target to $70 from $52.

Goldman Sachs had a Neutral rating but raised its target price to $48 from $35.

JPMorgan raised its rating to Overweight from Neutral, and the firm took its target price up to $78 from $51 in that call.

We even saw that Moody’s keyed on the credit ratings view and said that the Forward-5 trial is credit-positive for its prospects (Ba3 Corporate Family Rating).

After a $55.62 closing price from Friday, Alkermes still has a 52-week range of $27.14 to $80.71.

This 14 million plus share trading volume on Friday looks like it was the largest volume day of 2016, even if we include the 12.46 million shares that traded on January 21 — and that was when shares tanked to under $35 after having been at $60.

The new consensus analyst price target from Thomson Reuters is $63.55, but that is now up from $51.36 just a month ago. Alkermes had a consensus analyst target price of $50.82 just 60 days ago and $48.09 90 days ago.

What a difference a day can make, and now it has a new week to digest the news. Stay tuned.