Yahoo Inc. reached inside the ranks of rival Google Inc. in its latest changing of the guard, appointing longtime Web-search executive Marissa Mayer as its new chief and returning the struggling Internet company to a leader with deep technology experience.Talks with the Google vice president increased in the past few weeks after an initial approach on June 18. The board felt that someone with Ms. Mayer's stature—she was employee no. 20 at Google and helped design the look of the now-dominant search engine—would especially help Yahoo attract new talent to develop new Web services, said the person familiar with the CEO search.Ms. Mayer, 37 years old, had long been on the Yahoo board's shortlist of CEO candidates, said people familiar with the matter.
In naming Ms. Mayer, Yahoo passed over interim CEO Ross Levinsohn, who had overseen the company following the exit in May of Scott Thompson, a former president of eBay Inc.'s PayPal, over some misstated credentials. Mr. Levinsohn, who couldn't be reached, has a background in media and ad sales.
She and her husband, investor and entrepreneur Zack Bogue, are expecting their first child.
A Yahoo spokeswoman declined to comment about Ms. Mayer's compensation details.
Inside Yahoo, reactions to Ms. Mayer's appointment ranged from shock and delight among some company's employees who work on its various Web services, to disappointment among some employees in the company's important sales arm who had been following a relatively new strategy initiated by Mr. Levinsohn.
Other managers privately expressed concern that yet another CEO would lead to reorganizations and attrition could accelerate.
In recent years, the company has gone through a revolving door of CEOs, including Mr. Thompson and Carol Bartz, who was removed in September. Ms. Mayer becomes Yahoo's sixth CEO in five years, including two interim CEOs.
As head of 17-year-old Yahoo, Ms. Mayer will try to orchestrate one of the most notable turnarounds in corporate America. Yahoo's revenue has receded in the past few years as companies like Google and Facebook Inc. have siphoned away users and advertising dollars.
Yahoo has also faced pressure from activist investor Mr. Loeb, while co-founder Jerry Yang and other directors have left the board. That has resulted in an almost brand-new board, opening the way to Ms. Mayer's recruitment.
After Ms. Mayer joins Yahoo's board, nine of the company's 12 directors will have joined this year, including four since May.
In an interview, Ms. Mayer said, "Yahoo is a company with an amazing following, terrific brand and huge amount of potential."
In a statement, Yahoo chairman Fred Amoroso cited Ms. Mayer's "unparalleled track record in technology, design, and product execution" and said those make her "the right leader for Yahoo."
Ms. Mayer's departure is the latest exit from Google, where executives like Sheryl Sandberg have jumped ship in recent years to companies such as Facebook, though Google retains a deep bench of talent. Ms. Mayer is the most visible departure since Google co-founder Larry Page, who she once dated, was appointed CEO of the Internet search giant in April 2011.
Ms. Mayer said after she broke the news of the Yahoo job to Google's leaders, she received positive encouragement from Mr. Page, executive chairman Eric Schmidt, and company co-founder Sergey Brin. She also posted on Google's social networking service Google+, writing that she's "incredibly excited" to be taking on the new job.
In a statement, Mr. Schmidt praised Ms. Mayer as a "great product person" and added that "Yahoo has made a good choice." He added that he gives Ms. Mayer and Yahoo his "best wishes."
Wall Street appeared to welcome the move, with Yahoo's stock rising 2% to $15.96 in after-hours trading after the CEO appointment became public.
Yahoo's strategy has shifted in recent months under its changing leadership, causing some investors to wonder what the company's direction will be. With Ms. Mayer, analysts expect a focus on Yahoo's core online advertising business.
With Ms. Mayer's selection, there now are 20 female CEOs of Fortune 500 companies—a record number, according to Catalyst, a nonprofit New York group that researches women's issues. Altogether, 41 women run Fortune 1000 companies, Catalyst figures show.
Ms. Mayer made clear Monday that "advertising will continue to be the main revenue source" at Yahoo. She described Yahoo's position in online display and search advertising as "strong" and added that she hopes to "inject some innovation and some new ways of advertising" into its business model."Marissa gets both search and display advertising," said BGC Partners analyst Colin Gillis.
Ms. Mayer said didn't know whether Mr. Levinsohn would be staying but said she had reached out to him on Monday. She said she planned an initial visit to Yahoo headquarters on Tuesday, her first day as CEO.
Ms. Mayer joined Google in 1999 and led many of its well-known products, including the look of the search engine. Most recently, she was responsible for initiatives related to local businesses and spearheaded Google's acquisition of Zagat, the business-reviews site.
Last year, after Mr. Page became Google CEO, he promoted a handful of executives to lead business units such as Android, Chrome and commerce and local initiatives—but not Ms. Mayer. She has a computer-science master's degree from Stanford University and recently joined the board of Wal-Mart Stores Inc.
Ms. Mayer is known as a talented manager with an occasionally brusque style that can make her difficult to work for, according to people who have worked under her. She has an obsessive attention to detail, often micromanaging details down to the shade of colors in new product designs, these people say.
She's well-known throughout Silicon Valley, in part for her elaborate parties that regularly draw the tech elite. They include a Halloween pumpkin carving bash and an annual winter holiday party where she erects an ice-skating rink in the backyard of her Palo Alto, Calif., home.
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