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IBS Center for Management Research











Banning Flexible Work Options: Yahoo's New Controversial HR
Policy
This case was written by Adapa Srinivasa Rao, under the direction of Debapratim Purkayastha, IBS
Hyderabad. It was compiled from published sources, and is intended to be used as a basis for
class discussion rather than to illustrate either effective or ineffective handling of a management
situation.










2013, IBS Center for Management Research. All rights reserved.
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Sankarapally Road, Hyderabad 501 504, Andhra Pradesh, India or email: info@icmrindia.org
www.icmrindia.org
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HROB/162
Banning Flexible Work Options: Yahoo's New
Controversial HR Policy
Some of the best decisions and insights come from hallway and cafeteria
discussions, meeting new people and impromptu team meetings. Speed and quality are
often sacrificed when we work from home.
i

Yahoos Note Asking all its Employees to Start Working its Offices, in
February 2013.
This seems a backwards step in an age when remote working is easier and more
effective than ever If you provide the right technology to keep in touch, maintain
regular communication and get the right balance between remote and office working,
people will be motivated to work responsibly, quickly and with high quality.
ii

Richard Branson, Founder of the Virgin Group
1
, in February 2013
Internet major Yahoo!, Inc. (Yahoo) found itself losing market share in the early 2000s as competition
began to increase. The continuing crisis in the company saw the exit of successive CEOs reportedly
due to their non-performance. In July 2012, the Yahoo board appointed a longtime Google, Inc.
(Google)
2
executive, Marissa Mayer (Mayer), as the new CEO of the internet giant. Mayer was given
the task of reviving the companys fortunes. Soon after taking over as CEO, Mayer began
implementing a slew of measures to put the company back on the growth track. She replaced a number
of senior executives at Yahoo with new ones. She also focused on changing the culture at Yahoo. She
introduced a new suggestion program called Process, Bureaucracy, and J ams (PB&J) to revitalize the
spirit of innovation among Yahoos employees. Besides, she set up a new framework called the four
Cs to evaluate the performance of all the employees at Yahoo. Other initiatives included providing
free food and free iPhones to employees at the companys headquarters. Mayer also took some
decisions like extending the maternity and paternity leave of the employees.
However, Yahoo implemented a new HR policy in February 2013 which stirred up a hornets nest.
Under the new policy, all employees were required to work from Yahoos offices. In effect, the new
policy prohibited employees from working from home. While some analysts supported the new HR
policy saying that it would help in trimming the bloated infrastructure that Yahoo had built up over the
years, it attracted criticism from other analysts and executives in other companies. Many analysts said
that the new policy was regressive and went against the flexible work practices pioneered and
followed by technology companies. Some analysts opined that the new HR policy would prevent
Yahoo from attracting talented employees at a time when it was looking to hire more such people.

1
Virgin Group, headquartered in London UK, is a British multinational branded venture capital conglomerate
company.
2
Google, Inc., headquartered in Mountain View, California, US is a leading internet company in the world.
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Employees today are demanding better work-life balance, and employers will need to offer such
options if they want to attract and retain the best workers,
iii
said Greg Kratz, independent business
columnist for Deseret News. But Yahoo defended its policy saying that its new HR policy need not be
seen as a general industry trend but just as a new arrangement to suit the needs of the company.
Analysts felt that Yahoos controversial decision had brought to the fore many questions related to
flexible working. They said that companies often paid lip service to flexible working while
discouraging their employees from availing of these options. Experts said they had often found a
marked mismatch between the perceptions of employees and employers with regard to flexible
working. In the words of Office Insight, a UK-based leading publication dedicated to the design and
management of workplaces: Is it because a lot of firms feel obliged to echo the received wisdom
about flexible working in order to fit in to a paradigm and/or attract staff, while believing in practice
that its best to have everybody in an office for much of the time? Or is that organizations and
employees have different ideas about what constitutes flexible working in the first place? Or is it
simply that managers dont trust staff? Something else or a mixture of all of the above?iv
BACKGROUND NOTE
Yahoo was founded by two PhD. students of Stanford University, J erry Yang (Yang) and David Filo
(Filo), in 1994 in Sunnyvale, California, USA. It was initially started as J erry and Davids Guide to
the World Wide Web (J DG), a website which acted as a directory of several other websites. Yang and
Filo started the website to cater to the needs of people who wanted to go to a single place and find
websites related to diverse areas. Over time, J DG became very popular and became the first choice of
people browsing the web to find sites intelligently. It helped people to discover useful, interesting, and
entertaining content on the Internet. J DG was later renamed Yahoo
3
in 1994 and was positioned as a
customized database intended to serve different users. Yang and Filo developed customized software
to help users locate, identify, and edit information available on the internet. Yahoo quickly became
very popular among internet users and attracted a lot of media attention.
Yahoo was formally incorporated in March 1995 and started implementing a business plan modeled
on traditional media companies. Sequoia Capital
4
, a well-known venture capital firm, agreed to fund
Yahoo in April 1995, with an initial investment of US$ 2 million.
v
Yahoo generated its revenues
mainly through online advertisements, banner ads
5
and ad placement fees, promotions,
6
sponsorships,
direct marketing
7
and merchandising. It also generated revenues from monthly hosting fees and
commissions on online sales from its merchant partners. These included transaction fees generated
from the sale of merchandise on its site. In 1995, Yahoo appointed Timothy A. Koogle (Koogle) as its

3
Yahoo is the abbreviation for Yet another Hierarchical Officious Oracle.
4
Sequoia Capital, headquartered in Menlo Park, California, US was a Silicon Valley-based venture capital
firm founded by Don Valentine in 1972. It had invested in many technology companies like Yahoo!, Google,
PayPal, Electronic Arts, YouTube, etc.
5
Banner advertisements appear on web pages within various Yahoo channels. Hypertext links were embedded
in each banner advertisement to give users instant access to the advertiser's website, to obtain additional
information, or to purchase products and services.
6
Promotional sponsorships were typically focused on a particular event, such as sweepstakes. The merchant
sponsorship icon advertised products. Users had to click on the icon to complete a transaction.
7
Direct marketing revenues came through e-mail campaigns targeted at Yahoo's registered users who had
indicated their willingness to receive such promotions.
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CEO and strengthened its management team significantly. Koogle was an engineering graduate from
Stanford University and had spent nine years in Motorola, Inc.
8
(Motorola) before joining Yahoo. The
appointment of Koogle led to the introduction of more innovations in Yahoo. It was the first company
to introduce an online navigational guide on the Internet. It also started offering media content,
communication, personalized information, and commerce services on its website. In July 1996, Yahoo
launched My Yahoo, a personalized web information service. This allowed users to create their
personal profile and access information based on their personal interests. Its new services such as
Yahoo Address Book, Yahoo Calendar, Yahoo Briefcase, Yahoo Phone Book, and Yahoo Notepad
helped users to manage their personal information. In April 1996, Yahoo raised US$ 33.8 million by
selling 2.6 million shares through an IPO. The amount raised through the IPO was used to expand its
operations significantly.
By the late 1990s, Yahoo had developed into a leading international web portal. It made a number of
strategic acquisitions over a period of time and this helped it to diversify its services and expand its
business. It also reported a substantial growth in its revenues between the years 1997 and 2000. More
than 85 percent of its revenues came from the sale of banners and sponsorship advertisement while the
remaining came from business services and e-commerce transactions. At the end of 2000, Yahoo had
been drawing 180 million unique visitors, which made it one of the leading internet brands. By 2006,
Yahoo emerged as the worlds largest provider of online services. It offered a variety of products and
services that enabled customers to communicate with one another, find information, create, share, and
access information.
But the emergence of other leading internet firms like Google increased the competition for Yahoo in
key areas like internet search and email. According to many industry experts, Yahoo had also grown
complacent and failed to adapt itself properly to the rapidly changing business environment. Also,
Yahoo was heavily dependent on the advertising revenues generated by the dotcoms and the dot-com
bust of the early 2000s severely affected its revenues. The online advertising market too underwent
many changes in the early 2000s and advertisers started to look beyond banner ads toward a new genre
of ads that integrated the internet, television, and radio. But Yahoo failed to understand what kind of
advertisements worked for its customers. Analysts also said it failed to make any significant changes
to its age old business model that would have helped it cater to the needs of a wide range of customers.
It deployed a new set of search technologies in 2004 to compete effectively with Google. However,
the introduction of new features to its email service in 2007 to compete with Googles Gmail services
did not yield results. It had to lay off a number of its employees in 2008 as it struggled in the market.
In February 2008, Microsoft Corporation
9
(Microsoft) made a bid to acquire Yahoo for US$ 44.6
billion. The bid was rejected by Yahoo on the grounds that it undervalued the company substantially.
Since 2007, Yahoo showed four CEOs the door as they failed to improve the companys performance.
Its share price fell drastically, reflecting the poor performance of the organization (Refer to Exhibit-I
for the graph of Yahoos share price from J anuary 2006 to January 2013). But none of them could
significantly revive Yahoos fortunes. For the Fiscal Year 2011, Yahoo had revenues of US$ 4.98
billion (Refer to Exhibit-II for the key financials of Yahoo from 2007 to 2011).

8
Motorola, Inc., headquartered in Schaumburg, Illinois, US was a leading American multinational
telecommunications company.
9
Microsoft Corporation, headquartered in Redmond, Washington, US, is a US-based multinational corporation
that develops, manufactures, licenses, and supports a wide range of products and services related to
computing through its various product divisions.
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YAHOO GETS A FIFTH CEO IN FIVE YEARS
In May 2012, Yahoo fired its CEO Scott Thomson (Thomson) just four months after his appointment.
Scott was fired by Yahoos board after it was found that he had falsified his resum by including a
computer science degree which he did not have.
vi
Thomsons sudden ouster led to chaos at the
company which found itself confronted with one crisis after the other. Yahoo appointed its head for
global media business, Ross Levinsohn, as its interim CEO till they found a new CEO. Later, in July
2012, Yahoos board appointed Mayer as its new CEO on the recommendation of the CEO search
committee appointed by it. Mayer was the fifth CEO to head the organization in five years
vii
(Refer to
Exhibit-III for the list of Yahoos CEOs since its inception). A former longtime executive of Google,
Mayer had a masters degree in computer science from Stanford University and began her career at
Google in 1999. She was the 20th employee of Google and was involved in the development of
Google search services and was in charge of its user experience
10
during the first five years at Google.
She quickly gained a reputation as an effective leader and was instrumental in the development of
some of Googles iconic products like the Google homepage, Gmail, and Google News. At the time of
joining Yahoo, Mayer was responsible for Googles mapping, local, and location services.
Commenting on the appointment of Mayer as its new CEO, Yahoo boards chairman Fred Amoroso
said, The board was drawn to Mayers unparalleled track record in technology, design, and product
execution.
viii
Many analysts said that Yahoo wanted to focus on the functionality of its products by
appointing Mayer as its new CEO. Industry experts too were excited about the choice of Mayer.
Martin Sorrell, the CEO of WPP plc
11
, said, She comes with a formidable reputation, but well see
how she analyzes it all.
ix
Mayer also had a reputation for nurturing talent. During her Google days,
she started a leadership training program called Associate Product Manager (APM) for Googles
topnotch engineers. The objective of the APM program was to encourage people to grow into leaders
and realize their full potential. The APM program was a big success and later inspired many similar
programs by other companies in the Silicon Valley.
Though Yahoo was one of the most visited portals on the internet with 700 million monthly visitors, it
found itself unable to introduce new products in the search, social, and mobile space to increase its
revenue base (Refer to Exhibit-IV for the list of services offered by Yahoo). Yahoo did not come up
with new appealing products in areas like social networking and also lagged behind in other key
growth areas like mobile internet. Its revenues had been stagnating for several years and industry
experts began to wonder about the future of the company (Refer to Exhibit-II for the key financials of
Yahoo from 2007 to 2011). The Yahoo board began scouting around for somebody who still had
confidence in Yahoos future. They finally zeroed in on Mayer as they thought that she could make
Yahoo flourish again. Michael J. Wolf, Yahoo director and in charge of the CEO search, said, The
board wanted someone who believed Yahoo can grow again and who believed they could do it.
x

ADDRESSING ISSUES RELATED TO ORGANIZATIONAL CULTURE
Many analysts and some Yahoo insiders themselves blamed the culture at Yahoo for its problems.
According to Paul Graham, co-founder of Viaweb
12
, even in the late 1990s, The company felt
prematurely old. Most technology companies eventually get taken over by suits and middle managers.
At Yahoo it felt as if theyd deliberately accelerated this process. They didnt want to be a bunch of

10
User experience involves taking care of how people navigate the Googles sites and maintaining the
simplicity of Googles services.
11
WPP plc, headquartered in London, UK, is a major advertising and public relations company in the world.
12
Viaweb was the first software as a service company, which was acquired by Yahoo in 1998, where it
became Yahoo Store.
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hackers. They wanted to be suits. A media company should be run by suits.
xi
Unlike some of its
competitors like Google, Yahoo couldnt take decisions speedily. It followed a matrix organization
structure
13
which, according to its critics, inhibited the speed at which it took decisions regarding new
projects and killing unviable ones. Yahoos large and interlinked structure made it very difficult for it
to launch new products and discontinue unviable ones. The constant change of CEOs also resulted in
many key projects being dropped in planning or execution stage whenever there was a change at the
top. The lack of stability in the top level management led to many senior executives leaving the
company.
The infighting among the top leadership at Yahoo which saw the ouster of Yahoos co-founder J erry
Yang in 2012, led to the emergence of a consensus based culture at Yahoo. Unlike at other internet
companies like Google and Facebook, every major new initiative had to pass through a number of
stages. This ultimately led to delayed decision making at Yahoo. Many new initiatives relating to
emerging areas like mobile internet became caught in the bureaucratic tangle and never saw the light
of day. Commenting on the companys culture, Rich Rygg, a former manager at Yahoo, said, This
was Yahoos most fundamental problem. It was always management by persuasion, not management
by dictation.
xii
Many efforts taken in the past to introduce a more free culture which can speed up the
decision making process had failed. The initial informal culture prevalent since its founding days was
converted to a strict formal culture by its subsequent CEOs like Terry Semel (Semel). Over time, this
led to the bureaucratic culture getting firmly rooted at Yahoo, preventing any reversal of its fortunes.
As soon as Mayer took over as CEO, she set about the task of reviving the fortunes of Yahoo. One of
the key challenges before her was to change the culture at Yahoo to make the company competitive
again. She replaced some senior executives of Yahoo with new people whom she perceived to be more
growth oriented. She appointed a former Google executive Ken Goldman as the new CFO of Yahoo
and Kathy Savitt as the new CMO (Chief Marketing Officer). Another veteran from Google, Henrique
De Castro (Castro), was appointed as the new COO (Chief Operations Officer) of Yahoo. Recognizing
the need for harnessing the talent of Yahoos employees, a new position called executive vice-
president of people and development was created. Mayer recruited a veteran investment banker named
J ackie Reses (Reses) for the post of EVP, people and development. Reses would be responsible for
HR, business development, strategy, and M&A activities at Yahoo. The old HR boss of Yahoo, David
Windley (Windley), had been fired immediately after Mayer took charge. Windleys tenure at Yahoo
had seen a lot of brain drain and layoffs at Yahoo.
xiii
Many analysts opined that Reses would be a key
member in Mayers core team for restructuring the company by changing its organizational culture.
Commenting on the appointment of Reses at Yahoo, Mayer said, With her energy, insights, and
ability to build & transform great teams, Im thrilled J ackie Reses is joining Yahoo!
xiv
Resess main
task ahead was to recruit more talented people, nurture their skills, and devise better incentive schemes
for them. In a statement released after joining Yahoo, Reses said, As Yahoo! looks to develop and
define its future; hiring, managing and incentivizing talent will be of key importance.
xv

Apart from recruiting new people for the top positions in the company, Mayer also started many new
initiatives to change the culture of the organization. Within a month of taking over as CEO, she
introduced a new initiative called PB&J (Process, Bureaucracy, and Jams). PB&J was essentially the
new age version of the old suggestion boxes for employees in offices. The PB&J program was
intended to collect feedback and suggestions from Yahoos employees to rekindle the spirit of

13
A matrix organization structure is an organization structure where employees from different functional
disciplines are drawn into a team to facilitate horizontal flow of skills and information. Employees in a matrix
organization structure report to the respective project or product manager whose authority exists horizontal
across departmental boundaries.
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innovation at the company and boost the flagging morale of its employees. Mayer appointed Patricia
Moll Kriese (Moll), a former Google colleague who followed her into Yahoo, as the leader of the
PB&J initiative. Employees had to log in to an internal website and post their ideas and suggestions to
improve the working conditions at Yahoo.
xvi
Employees would also be able to vote on each others
ideas. The site would later rank the best ideas based on their popularity. The management would then
review the ideas and their popularity and implement the finest of the lot. Mayer hoped that the PB&J
program would end the gridlock at Yahoo by giving more power to the employees of the organization.
In September 2012, Mayer announced the four Cs strategy to nurture talent at Yahoo. The four Cs
stood for culture, company goals, compensation, and calibration.
xvii
The performance of all the
employees of Yahoo would also be evaluated based on the four Cs instead of the outdated revenue
based compensation system. She also wanted to replace the consensus culture at Yahoo with a more
democratic and responsive system in the long-term.
xviii

Mayer also took some other initiatives, which ranged from providing free food to Yahoos employees
at the companys cafeteria to giving free iPhones, which were aimed at making Yahoo an exciting
place to work.
xix
She came up with a new policy for the benefit of Yahoos employees who were going
to have children. In April 2013, Mayer extended the maternity and paternity leave for Yahoos
employees.
xx
As per the new leave policy, new fathers and mothers could avail of eight weeks of paid
parental leave. Mothers were entitled to another eight weeks of leave. New parents would also be paid
US$ 500 for buying groceries and new clothes for their babies.
YAHOO BANS WORK FROM HOME
As part of the steps she took to improve the fortunes of Yahoo, Mayer implemented a new HR policy
in February 2013. The new policy was communicated to the employees of Yahoo in the form of a
memo from the HR department (Refer to Exhibit-V for the memo sent to Yahoos employees).
According to the new HR Policy, employees of Yahoo could no longer work from home; they needed
to report to their offices regularly. The new HR policy also stipulated that people who could not
comply with the new policy would have to quit the organization. The new HR policy stipulated that all
remote workers at Yahoo had to start reporting to the office facilities by June 1.
xxi

The announcement sent shock waves across the technology world. Like many other business
innovations, American companies had been at the forefront in bringing innovations to the workplace.
They had pioneered the concept of work from home for employees and nearly 10 percent of US
workers worked from home at least one day every week.
xxii
According to the Families and Work
Institute
14
, 63% of employers let their team work remotely at least some of the time.
xxiii

Over the years, many technology companies across the world supported the concept of work from
home which offered more flexibility to their employees around the world (Refer to Exhibit-VI for the
data table for the Flexible Job Index
15
). Technology companies fared higher than companies which did
not offer flexible working opportunities to their employees. Technology companies had also become
the preferred choice for female employees due to the work-life balance they offered.
Many employees of Yahoo who had joined the organization looking forward to a flexible work
schedule, were left confused and angry. Some of them even said the new policy went against their
employment contract with Yahoo. Kara Swisher, co-executive editor at AllThingsD
16
, said, Many

14
Families and Works Institute, headquartered in New York, USA, is a nonprofit organization which works to
provide research for living in todays changing workplace, changing family and changing community.
15
Flexi J ob Index shows the flexi employment opportunities available in top career categories in the past year
divided into 4 quarters.
16
AlThingsD, is a website dedicated to news, analysis, and opinion on technology, internet, and media.
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such staffers who wrote me today are angry, because they felt they were initially hired with the
assumption that they could work more flexibly. Not so, as it turns out.
xxiv
Industry and academic
experts too expressed reservations on the new HR policy. Some experts said that a blanket ban on
work from home might yield negative results. David Lewin, management professor at the University
of California
17
, said, A variety of studies show that telecommuting and working from home is
associated with higher productivity. Analytically, its not at all clear this would benefit Yahoo. They
could wind up with negative performance effects.
xxv
Some experts felt that the idea that banning
flexible work options would promote more innovation seemed bizarre.
xxvi

The new HR policy was expected to affect working women most as it would become difficult for them
to take care of their families and children. J ennifer Owens, editorial director of Working Mother
Media
18
, said, Its incredibly disappointing. Its a step backwardsa mindset from the days when
Yahoo was launched.
xxvii
Critics pointed out that Yahoo was looking to recruit more good people to
improve the fortunes of the organization and the new HR policy might prevent that happening.
YAHOO DEFENDS ITS NEW POLICY
However, Yahoo defended its new policy as being necessary for the company.
xxviii
It said that the new
policy would only affect 200 of Yahoos 12,000 employees. Mayer initially refused to comment on the
criticism of the new HR policy saying it was an internal matter of the company. But she finally gave
her opinion on the new HR policy at a conference for HR specialists held at a hotel in Los Angeles.
She started explaining Yahoos new HR policy saying, I need to talk about the elephant in the
room,
xxix
and pointed out to an image of a purple image of an elephant on the projection screens of
the hotel auditorium. Mayer said, People are more productive when theyre alone. But theyre more
collaborative and innovative when theyre together. Some of the ideas come from pulling two different
ideas together.
xxx
As an example of collaboration she cited the example of a new Yahoo weather app
for the iOS, the idea for which originated from two software engineers of Yahoo who worked in the
same office. The app was very innovative in that it used built-in geolocation technology in Yahoos
Flickr service for giving a more accurate picture of local weather.
One of the major criticisms leveled against Mayer was that she was trying to force her way of working
on the whole organization. Mayer had been five months pregnant when she was recruited. The news
regarding her pregnancy was made known to the world only after her appointment as Yahoos CEO
was announced. After joining Yahoo, Mayer was on leave for just a few days, returning to work within
two weeks of delivering the baby.
xxxi
There was similar outrage in the corporate world at that time as
other executives and analysts feared that this might set a bad precedent which might be emulated by
others. After delivery, Mayer had a nursery built in her office so that she could bring her baby to work
along with her.
xxxii
As not many people could afford such an arrangement, analysts felt that it would be
unfair for Mayer to ask all the employees to return to their offices immediately.
Employees in other technology companies too expressed fears that this policy might be implemented
in their organizations too. A week after the announcement by Yahoo, Best Buy Company, Inc.
19
too
announced that it would end its flexible work policy. Employees and analysts started wondering if the
new policy would set a precedent which might be emulated by others. However, Yahoo said that this

17
University of California is a public university system in the state of California, USA.
18
Working Mother Media, based in New York City, USA is an advertising circular which deals with the
concerns of working women in the US.
19
Best Buy Company, Inc. headquartered in Richfield Minnesota, USA is an American Multinational
Electronics Corporation. Best Buy has pioneered the Results-Only Work Environment (ROWE) which gave
freedom to employees to work on their own term in 2005. The program became popular with other
companies.
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new policy had only been brought forward to meet the needs of Yahoo and that other companies need
not emulate it. Yahoos spokesperson said, This isnt a broad industry view on working from home
this is about whats right for Yahoo, right now.
xxxiii

But not everyone was critical of Mayers new HR policy. According to some industry observers, most
of the people who were working remotely for Yahoo were not productive and many senior managers
too were not aware that these people were still working with Yahoo. Yahoo had built up a bloated
infrastructure where employees working even in its engineering departments never showed up at
office. The kind of work-from-home arrangements practiced at Yahoo were not common at other
bigger technology companies like Facebook and Google. Some industry observers felt that as many of
them might not find it possible to report to office every day, they might eventually quit and help in
reducing the costs of the company. Analysts said that Mayer had only done something which her
predecessors too knew that they had to do, but couldnt because of various reasons.
xxxiv
Some critics
said the issue had been blown up into a controversy because of the way it was handled by Yahoo.
They blamed Yahoos executives for not giving proper reasons for the new HR policy.
LOOKING AHEAD
Despite all the criticism leveled against the new HR policy, some analysts said that the one of the main
reasons behind the policy was to make some unproductive employees leave the organization on their
own. Yahoos per employee productivity was US$ 344,758 while Googles was US$ 931,657. Mayer
had been trying to make a lot of Yahoos unproductive employees leave the organization since she
took over as its CEO. Analysts opined that since many of Yahoos employees (who were not
productive enough) would find it difficult to report to the office regularly, the new policy might force
them to leave the organization without any formal layoffs being announced. And except for a few
companies like Best Buy, no other major technology company had followed Yahoo in cancelling the
flexible work schedule option for their employees. Some industry observers opined that other
technology companies might not feel any need to follow in Yahoos footsteps as they had better
systems in place which made their employees who were working remotely more accountable.
However, many people still wondered whether other companies would follow Yahoos lead. While
industry observers were still divided on whether Yahoos new HR policy would benefit the company,
questions were also raised on flexible work options. Greg Kratz wrote: Has the work-life pendulum
swung too far in favor of employees and allowing flexible work options? Or should more companies
offer their employees the chance to telecommute, when reasonable?
xxxv


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Exhibit I
Movement of Yahoos Share Price from January 2006 to January 2013

Source: http://finance.yahoo.com/.

Exhibit II
Key Financials of Yahoo from 2007 to 2011 (In US$ Thousands)
2007 2008 2009 2010 2011
Revenue 6,969,274 7,208,502 6,460,315 6,324,651 4,984,199
Cost of revenues 2,838,758 3,023,362 2,871,746 2,627,545 1,502,650
Gross profit 4,130,516 4,185,140 3,588,569 3,697,106 3,481,549
Total operating expenses 3,435,103 4,172,177 3,201,877 2,924,582 2,681,208
Income from operations 695,413 12,963 386,692 772,524 800,341
Other income, net 118,771 73,750 187,528 297,869 27,175
Income before income taxes
and earnings in equity
interests
814,184 86,713 574,220 1,070,393 827,516
Provision for income taxes (322,868) (259,006) (219,321) (221,523) (241,767)
Earnings in equity interests 150,689 596,979 250,390 395,758 476,920
Net income 642,005 424,686 605,289 1,244,628 1,062,669
Net income attributable to
non-controlling interests
(2,850) (5,765) (7,297) (12,965) (13,842)
Net income attributable to
Yahoo! Inc.
639,155 418,921 597,992 1,231,663 1,048,827
No. of employees 14,300 13,600 13,900 13,600 14,100
Source: Yahoo!, Annual Reports: 2009 and 2011.
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Exhibit III
CEOs of Yahoo
Name of the CEO Tenure Reason for Leaving
Tim Koogle 1995- May 2001 Resigned in 2001.
Terry Semel May 2001-June 2007 Hired from Warner Bros. Stepped down due
under shareholder pressure.
Jerry Yang J une 2007-January
2009
Agreed to resign under pressure from
shareholders in November 2008.
Carol Bartz J anuary 2009-
September 2011
Hired from Autodesk Inc., a design and
engineering software company. Fired for failing to
revive the company.
Tim Morse September 2011-
J anuary 2012
CFO of Yahoo. Worked as interim CEO until the
new CEO took over.
Scott Thompson J anuary 2012-May
2012
Hired from eBay Inc.'s PayPal. Resigned in May
2012 over a controversy regarding one of his
college degrees.
Ross Levinsohn May 2012-July 2012 Worked as interim CEO until the new CEO took
over.
Marissa Mayer J oined Yahoo as its
CEO in J uly 2012
Hired from Google, Inc.
Source: From Koogle to Levinsohn: CEOs at Yahoo, http://finance.yahoo.com, July 12, 2012.

Exhibit IV
Important Internet Services Offered by Yahoo
Search: Yahoo! Web Search helps users to find anything on the Internet. Yahoo! has several
products for search like Yahoo! Image, Yahoo! Video, Yahoo! Local, Yahoo! News, and Yahoo!
Shopping Search.
Content: Yahoo! Sports, Yahoo! Finance, Yahoo! Music, Yahoo! Movies, Yahoo! News, and
Yahoo! Games provide content on specific topics. Users also have the opportunity to personalize
content through My Yahoo!.
Communication: Yahoo! Mail and Yahoo! Messenger enable users to stay connected. My Web,
Yahoo! Personals, Yahoo! 360, Yahoo! Photos, and Flickr are some other communication services
from Yahoo!.
Mobile: Yahoo! Mobile provides services such as email, instant messaging, information search and
alerts on-the-go. It also includes mobile games. Yahoo! Photos is meant for camera phones.
Connected Life: Yahoo! offers a range of free and premium Yahoo! content and services to its
subscribers by partnering with broadband providers.
Commerce: Yahoo! enables consumer transactions on the web, with services such as Yahoo!
Shopping, Yahoo! Autos, Yahoo! Auctions, and Yahoo! Travel. They enable consumers to make
informed online purchases by providing them with relevant information.
Contd
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Contd
Small Business: Yahoo! Small Business enables small business owners and professionals to
establish and grow a business presence with services such as Yahoo! Domains, Yahoo! Web
Hosting, Yahoo! Merchant Solutions, Yahoo! Business Email, and Yahoo! Store. Yahoo! also
offers HotJ obs to help recruiters find the talent they seek.
Advertising: Yahoo! provides a comprehensive set of marketing solutions and tools for businesses.
Yahoo! helps marketers create and execute programs that both engage users to interact with their
brand as well as provide valuable insights into their customer base.
In addition, Yahoo! Search Marketing helps companies drive traffic to their websites through
services such as Sponsored Search, Local Advertising, and Product/ Travel/ Directory Submit. For
online publishers and portals, Yahoo! can add new revenue sources and enhance user experience
through the Yahoo! Publisher Network.
Adapted from www.yahoo.com.
Exhibit V
Memo Sent to Yahoos Employees
Yahoos,
Over the past few months, we have introduced a number of great benefits and tools to make us more
productive, efficient, and fun. With the introduction of initiatives like FYI
20
, Goals
21
, and PB&J , we
want everyone to participate in our culture and contribute to the positive momentum. From
Sunnyvale to Santa Monica, Bangalore to Beijing I think we can all feel the energy and buzz in
our offices.
To become the absolute best place to work, communication and collaboration will be important, so
we need to be working side by side. That is why it is critical that we are all present in our offices.
Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new
people, and impromptu team meetings. Speed and quality are often sacrificed when we work from
home. We need to be one Yahoo, and that starts with physically being together.
Beginning in J une, were asking all employees with work-from-home arrangements to work in
Yahoo offices. If this impacts you, your management has already been in touch with next steps.
And, for the rest of us who occasionally have to stay home for the cable guy, please use your best
judgment in the spirit of collaboration. Being a Yahoo isnt just about your day-to-day job, it is
about the interactions and experiences that are only possible in our offices.
Thanks to all of you, weve already made remarkable progress as a company and the best is yet to
come.
J ackie
Source: Why Yahoos No Home working Rule will Lead us Back into the Office, www.zdnet.com, February
27, 2013.

20
FYI is a Q&A tool where meetings are held every Friday at Yahoos headquarters in which employees could
ask her questions, where new hires are announced, etc.
21
Goals is a new initiative started by Marissa Mayer where quarterly and annual goals will be assigned at the
company, department, and individual level. All the employees of Yahoo need to commit themselves for
achieving those goals.
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Exhibit VI
Data Table for the Flexible Job Index - Top 25 Job Categories
Category Q1 (2011) Q2 (2011) Q3 (2011) Q4 (2011)
Account Management 3.06% 2.87% 2.78% 2.93%
Accounting & Finance 2.90% 2.73% 3.42% 3.95%
Administrative 4.29% 4.43% 5.90% 7.13%
Advertising & PR 1.35% 1.24% 1.31% 1.15%
Art & Creative 1.59% 1.97% 3.80% 2.79%
Bilingual 1.76% 1.29% 2.02% 2.11%
Computer & IT 5.18% 4.64% 5.70% 5.95%
Consulting 1.74% 1.88% 2.51% 2.54%
Customer Service 3.65% 3.65% 4.77% 5.60%
Education & Training 5.16% 4.81% 7.27% 5.89%
Engineering 1.57% 1.30% 1.63% 1.84%
Graphic Design 0.49% 1.17% 2.45% 1.76%
Human Services 2.33% 1.77% 1.97% 2.05%
Insurance 2.29% 2.68% 3.35% 2.67%
Internet & Ecommerce 1.72% 1.38% 2.05% 1.19%
Marketing 3.06% 2.56% 2.82% 2.84%
Medical & Health 7.58% 6.91% 9.54% 8.31%
Nonprofit & Philanthropy 5.64% 3.78% 4.15% 3.73%
Other 26.93% 21.88% 24.70% 27.76%
Project Management 2.16% 2.03% 3.57% 3.19%
Research 2.26% 2.10% 2.55% 3.04%
Sales 7.23% 5.67% 6.01% 5.73%
Web & Software Dev 3.13% 3.98% 6.15% 5.20%
Web Design 0.52% 0.97% 2.43% 1.61%
Writing 2.44% 2.14% 2.46% 2.44%
Source: http://www.flexjobs.com/trends

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End Notes:

i
Why Yahoos No Home working Rule will Lead us Back into the Office, www.zdnet.com, February
27, 2013.
ii
Richard Branson, Give People the Freedom of Where to Work, www.virgin.com, February 25, 2013.
iii
Greg Kratz, Balancing Act: Yahoos Decision Shouldnt Derail Flexible Work Options,
www.deseretnews.com, March 12 2013.
iv
Yahoo is Not the Only Firm that Doesnt Like Flexible Working, http://officeinsight.org, February 24,
2013.
v
www.yahoo.com
vi
James B. Stewart, In the Undoing of a C.E.O., A Puzzle, www.nytimes.com, May 18, 2012.
vii
Google exec Mayer Named Yahoo CEO, 5
th
in 5 Years, http://news.yahoo.com, J uly 16, 2012.
viii
Ibid.
ix
Andrew Ross Sorkin and Evelyn M. Rusli, A Yahoo Search Calls up a Chief from Google,
http://dealbook.nytimes.com, July 16, 2012.
x
Patricia Sellers, Marissa Mayer: Ready to Rumble at Yahoo, October 11, 2012.
xi
Paul Graham, What Happened to Yahoo, www.paulgraham.com, August 2010.
xii
As quoted in the article, Ronald Grover and Heather Inside Yahoo, by Ben Elgin, Linda Himelstein
Green, posted on www.businessweek.com, dated May 21, 2001.
xiii
Kara Swisher, Exclusive: Yahoos Longtime HR Head David Windley Out, http://allthingsd.com, August
10, 2012.
xiv
Nicholas Carlson, Marissa Mayer J ust Hired an Executive to Solve Yahoos Biggest Problem,
www.businessinsider.com, September 5, 2012.
xv
Marissa Mayers First 60 Days as Yahoo! CEO, www.siliconrepublic.com, September 13, 2012.
xvi
Ibid.
xvii
Hayley Tsukayama, Marissa Mayers Plan for Yahoo, http://articles.washingtonpost.com, September 26,
2012.
xviii
Ryan Tate, Marissa Mayer Allegedly has 10 or 20 Different Priorities for Yahoo, www.wired.com,
September 26, 2012.
xix
Mayer Strives to Change Yahoo! Culture, www.forbes.com, September 7, 2012.
xx
Julianne Pepitone, Marissa Mayer Extends Yahoos Maternity Leave, http://money.cnn.com, April 30,
2013.
xxi
Douglas MacMilan and Karl Baker, Yahoo CEO Mayer Revives Debate over Work-From-Home Merits,
www.bloomberg.com, February 27, 2013.
xxii
Elizabeth Weise and J on Swartz, As Yahoo Ends Telecommuting, Others Say it Has Benefits,
www.usatoday.com, February 26, 2013.
xxiii
Kenneth Matos and Ellen Galinsky, 2012 National Study of Employers,
http://familiesandwork.org/site/research/reports/NSE_2012.pdf.
xxiv
Leslie Larson, Marissa Mayer Tells Yahoo Employees who Work from Home to Get Back to the
Officewill Other Tech Companies Follow Suit? www.dailymail.co.uk, February 23, 2013.
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xxv
Jenna Goudreau, Back to the Stone Age? New Yahoo CEO Marissa Mayer Bans Working from Home,
www.forbes.com, February 25, 2013.
xxvi
Margaret Ryan, Teleworking: The Myth of Working from Home, www.bbc.co.uk, February 27, 2013.
xxvii
Jenna Goudreau, Back to the Stone Age? New Yahoo CEO Marissa Mayer Bans Working from Home,
www.forbes.com, February 25, 2013.
xxviii
Chris Isidore, Yahoo Defends No-Work-At-Home Policy, http://money.cnn.com, February 27, 2013.
xxix
Christopher Tkaczyk, Marissa Mayer Breaks her Silence on Yahoos Telecommuting Policy,
http://tech.fortune.cnn.com, April 19, 2013.
xxx
Christopher Tkaczyk, Marissa Mayer Breaks her Silence on Yahoos Telecommuting Policy,
http://tech.fortune.cnn.com, April 19, 2013.
xxxi
Yahoo! CEO Marissa Mayer Back to Work Full Time J ust Two Weeks After Giving Birth to Her First
Child, www.dailymail.co.uk, October 15, 2012.
xxxii
Leslie Larson, Hayley Peterson, and Reuters Reporter, Yahoo! Boss Marissa Mayer Under Fire for
Building Personal Nursery Next to Office- Before Telling Employees They Cannot Work from Home,
www.dailymail.co.uk, February 26, 2013.
xxxiii
Jenna Goudreau, Back to the Stone Age? New Yahoo CEO Marissa Mayer Bans Working from Home,
www.forbes.com, February 25, 2013.
xxxiv
Nicholas Carlson, Why Marissa Mayer Told Remote Employees to Work in Office or Quit,
www.businessinsider.com, February 24, 2013.
xxxv
Greg Kratz, Balancing Act: Yahoos Decision Shouldnt Derail Flexible Work Options,
www.deseretnews.com, March 12 2013.