Fired Yahoo exec gets $58M for 15 months of work


SAN FRANCISCO (AP) — Yahoo’s recently fired chief
operating officer, Henrique de Castro, left the Internet company with a
severance package of $58 million even though he lasted just 15 months on
the job.
The disclosure in a regulatory filing Wednesday may lead
to more second-guessing about Yahoo CEO Marissa Mayer’s decision to
hire de Castro as her second-in-command in October 2012.
dumped de Castro in January after concluding he wasn’t executing on her
plan for reviving Yahoo’s lackluster ad growth. De Castro had been in
charge of ad sales.
"Ultimately, Henrique was not a fit and that’s
a very regrettable conclusion," Mayer told analysts in late January.
"And it’s a conclusion that we tried very hard to avoid, but it was the
right decision in the end for the company." After making the expensive
mistake, Mayer has said she won’t pick another chief operating officer.
Castro’s severance pay more than doubled the amount that Yahoo paid
Mayer last year. Mayer’s compensation was valued at $24.9 million, a 32
percent decline from the previous year. The decrease stemmed primarily
from a stock award of $35 million that she received in July 2012 when
Yahoo persuaded her to leave her previous job as a top Google Inc.
executive to become its CEO.
Yahoo Inc. previously disclosed de Castro would be getting a severance package, but didn’t reveal the
amount until Wednesday.
company’s board said most of the severance stemmed from the costs of
luring de Castro from his previous job at Google. Like many other senior
Google executives, de Castro would have received millions in stock by
staying at the company. That prompted Yahoo to make up for some of the
Google awards he had to relinquish when he defected.
"The board
believed at the time Mr. de Castro was hired that he had a unique set of
highly valuable skills and experiences that would be key to returning
the company to long-term growth and success," Yahoo’s compensation
committee said in its defense of de Castro’s severance pay.
compensation committee ended up having such a dim view of de Castro’s
performance in 2013 that it decided not to give him a bonus, according
to Wednesday’s filing. He was eligible for a bonus of up to $540,000, or
90 percent of the $600,000 salary that he received last year.
Castro’s severance package wouldn’t have been worth nearly as much if
Yahoo’s stock hadn’t more than doubled during de Castro’s brief tenure
with the company.
But those gains had little to do with the
managerial acumen of de Castro, Mayer or any other Yahoo executives.
Analysts trace almost all the increase in Yahoo’s stock price to the
company’s 24 percent stake in China’s Alibaba Group, which is running
some of the world’s fastest-growing and most-profitable e-commerce
sites. Alibaba is planning to go public on the New York Stock Exchange
and when that happens, Yahoo will be able to reap a multibillion dollar
windfall from its holdings in the company.
Yahoo’s own business
remains in a funk. The Sunnyvale, Calif., company’s revenue, minus ad
commissions, dipped 1 percent last year. Advertising sales showed some
signs of modest improvement during the first three months of this year,
but Yahoo is still lagging the overall growth of Internet marketing.
Yahoo’s stock price remained at roughly the same level as when de
Castro joined the company, his severance package value would have been
worth about $17 million.
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