Yahoo fire chief operating officer with package of $58m

Yahoo’s recently fired chief operating officer left the internet company with a severance package of $58m (€42m) even though he lasted just 15 months in the job.

The disclosure in a regulatory filing could lead to more second-guessing about Yahoo chief executive Marissa Mayer’s decision to hire Henrique de Castro as her second-in-command in October 2012.

Ms Mayer dumped Mr de Castro in January after concluding he was not executing her plan for reviving Yahoo’s lacklustre ad growth. Mr de Castro had been in charge of ad sales.

“Ultimately, Henrique was not a fit and that’s a very regrettable conclusion,” Ms 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, Ms Mayer has said she will not pick another chief operating officer.

Mr de Castro’s severance pay more than doubled the amount that Yahoo paid Ms Mayer last year. Her compensation was valued at $24.9m, a 32% decline from the previous year.

The decrease stemmed primarily from a stock award of $35m she received in July 2012 when Yahoo persuaded her to leave her previous job as a top Google executive to become its chief executive.

Yahoo previously said Mr de Castro would be getting a severance package, but did not reveal the amount until Wednesday. The company’s board said most of the severance stemmed from the costs of luring him from his previous job at Google. Like many other senior Google executives, he would have received millions in stock by staying at the company.

The compensation committee ended up having such a dim view of his performance in 2013 that it decided not to give him a bonus, according to Wednesday’s filing.

His severance package would not have been worth nearly as much if Yahoo’s stock had not more than doubled during de Castro’s brief tenure.

However, those gains had little to do with the managerial acumen of Mr de Castro, Ms Mayer, or any other Yahoo executives.

Analysts trace almost all the increase in Yahoo’s stock price to the company’s 24% 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 willbe able to reap a multibillion-dollar windfall from its holdings in the Chinese company.

Yahoo’s own business remains in a funk. The Sunnyvale, California, company’s revenue, minus ad commissions, dipped 1% last year.

Advertising sales showed some signs of modest improvement during the first three months of this year, but Yahoo is still lagging behind the overall growth of internet marketing.