The NYT had an article on Yahoo CEO's $239 million payout for her five years as CEO of Yahoo. The article says that from the standpoint of shareholders, since the value of the company's stock tripled, she earned her pay. This assessment is extremely misleading. It would be like saying that a firefighter getting paid $10 million earned her pay, because she got three people out of a burning house.

The question is not just the return to the shareholders, but the return compared to what they would have gotten had the next person in line been CEO. As the piece points out, the vast majority (perhaps all) of the gains to shareholders were due to the increase in the value of its stock holdings in Alibaba Group and Yahoo Japan. Ms. Mayer had virtually nothing to do with the rise in value of these holdings, although there were some legal issues that needed to be resolved to allow Yahoo shareholders to reap these gains.

While the resolution of these issues was important to shareholders, lawyers usually are not paid $48 million a year. And of course, Yahoo did actually have to pay lawyers to resolve these issues in any case.

As far as turning around Yahoo's core business, the piece concludes that Mayer failed, but it was likely impossible in any case. While this assessment may be accurate, it doesn't make sense from the shareholder's standpoint to pay someone $239 million to do something that is impossible.

It actually would have been possible to structure a contract for a CEO that based their pay on the rise in Yahoo's stock value net of its holdings in Alibaba Group and Yahoo Japan. (The contract could have even included a performance bonus of $5 to $10 million for overseeing the resolution of the legal issues with these holdings — pretty good pay for very part-time work.) Such a contract would almost certainly have left Ms. Mayer with a much smaller paycheck and Yahoo shareholders with more money.

As it is, shareholders effectively gave up roughly 0.4 percent of the value of the company to cover her pay over the last five years. This can be thought of as the CEO tax.