The company told employees Wednesday that it would stop all annual pay raises in 2009. Yahoo is trying to turn its fortunes around while it faces internal struggles, as well as the external challenges presented by the current economy.
The news comes two weeks after Yahoo announced that Carol Bartz would replace Jerry Yang as CEO, and it's among the first major steps Bartz has taken since she took over. Bartz, 60, was executive chair of Autodesk and prior to that served as its CEO for 14 years. She's known for being a straight-talker, and analysts have praised her, saying she has the chops to lead Yahoo through turbulent times. Bartz is credited with turning Autodesk around, in part by imposing structure on employees who were characterized as undisciplined, though talented.
Despite the freeze on annual raises at Yahoo, employees who are promoted to higher positions within the company could still obtain increases.
Yahoo isn't alone in turning to salary freezes as a means to tighten spending. Several other companies, including Microsoft, are halting pay raises to reduce payroll costs. Others have come up with alternative means for reducing their payroll. For instance, media company Gannett has mandated its employees take one week of unpaid vacation. Google announced a new stock option plan for its employees this week. The methods won't necessarily halt layoffs.
Yahoo laid off about 1,500 people in December, and several blogs reported rumors that there may be more to come. However, those rumors are based on an anonymous inside source.