Whatever else it betokens, the management turmoil at Yahoo represents the spectacular collapse of one of the main load-bearing beams of the internet economy: the stock-option culture, no less.
The scaffolding remained in place a bit longer at Yahoo because the company is profitable - just (it forecasts break-even this quarter).
Yet in the past few weeks the roof has fallen in. Although he remains chairman, the departure of chief executive Tim Koogle puts the cap on an exodus of management talent that has included the heads of European and Asian and Korean operations. More departures are predicted to follow.
Meanwhile, and not coincidentally, Yahoo has become a member of the dreaded 90 per cent club of companies whose share price has shrivelled by that amount from its all-time high.
Yahoo is not alone in its disarray. Lycos, Alta Vista and broker Ameritrade are other dotcoms sporting high-profile vacancies. No fewer than 26 of them lost their chief executive officer (CEO) in January, according to Business Week.
This falling masonry is the result of several powerful tremors that have opened up the ground beneath new-economy hopefuls. The first, and most spectacular, is the stockmarket meltdown, which has had the unanticipated effect of yanking all those hand-crafted option-based incentive schemes into reverse. Instead of holding the company together, they are now pulling it to bits.
'Virtually all dotcoms have relied disproportionately on stock options as a form of pay,' says Vicky Wright of remuneration specialists Hay Management Consultants. 'This is tantamount to letting the stock market decide your pay policy.'
The danger is obvious. When the price tanks, so does the incentive for the best people to stay - exerting further pressure on the share price, since people are most companies' best asset.
The consequences ripple outwards from there. Companies' initial response was to reprice their options to a sharply lower base, or issue new ones. But persuading investors to dilute their anaemic stock still further is getting harder, even in the US. A full 15 per cent of Microsoft is under option to its employees. 'There has to be an end to that story,' says Wright.
The other alternative - redeeming the equity element by raising all cash salaries 50 per cent - is also fraught. Equity payments don't figure on income statements.
Cash payments do. So paying people a normal salary may double your losses, or reduce profits by half (that was the point of using options in the first place).
It is not just employment costs that have been kept artificially low by stock options. Dotcoms have habitually also used them to pay suppliers - especially professional advisers. In reverse, removal of the option alternative can thus have the effect of substantially raising the cost base.
This makes struggling dotcoms less attractive to potential buyers. So do 'change of control' conditions attached to senior remuneration packages. These often specify that if a company is acquired, all outstanding options vest (that is, they become immediately exercisable). In that case, 'the handcuffs are loosed,' says Professor Tim Morris at Imperial Management School. Either the former captives leave at once - or they must be offered shed-loads of options to stay. 'It's a high-pressure, fluid market anyway - this just increases the fluidity,' notes Wright.
A second source of instability is growing pains within the companies themselves. Entrepreneurs will jump through almost any hoop for the sake of a £10 million option payout, points out John Stork of career strategy adviser Stork and May.
But this isn't normal behaviour and it doesn't necessarily make them good executives - sometimes the reverse - warping judgment and distorting behaviour.
Either way, says Stork, these are tense and uneasy partners for the more sober and grey heads increasingly being sought to drag the dotcoms into the real world.
Enter at this point the third element in the triple whammy that has sent the dotcoms' management structures reeling: a growing revolt against 'always-on' internet work cultures.
For Stork, this is the reason that CEO jobs generally - and especially those at dotcoms - are getting harder and harder to fill. 'People say to themselves, "Been there, done that",' says Stork.
'They know the markets will give them at most four years. Why should they continue to sacrifice their health and families to the impossible job of holding the share price up against impossible economic conditions?'
Morris sees the same current at work in ranks below the top brass. Commitments to employers and work status are becoming more instrumental and short-term, he believes; commitment to self is correspondingly stronger. Thus, when the option dream dies, people suddenly realise that it came at a cost: absurd hours, often not very good working conditions and mediocre pay. Even if the company survives, it's unlikely to be enough to compensate for the 'quite complex' mental processes of disappointment, Morris believes.
How can the dotcom remuneration framework be stuck together again? Not easily, experts reckon. Even if stockmarkets boom anew, for obvious reasons it's unlikely companies or their employees will turn to share options with their former abandon.
For one thing, the employment landscape has been permanently changed by the events of the last few years. For companies, the account ing authorities will eventually disallow the fiction that options somehow aren't a cost, while all the signs are that individuals will continue to shift their priorities towards a work/life balance.
Few companies, notes Wright, have been as creative in working out how to pay their people as they have in their internet accounting. One exception is the free-form Brazilian company Semco, where staff have a menu of 11 different payment options to mix and match. A few others are allowing new hires job portfolios at different firms.
Others had better follow suit fast. Otherwise, as the stock options that inflated the internet bubble explode, they will take the houses that Tim, Jeff and Meg built down with them.
