How Yahoo's Ousted COO Got No Performance Bonus Yet Pocketed $58 Million After Just a Little Over a Year on the Job. It's Our Good Timing Non-TV Story of the Day Bloomberg BusinessWeek
“After 15 months on the job, [Yahoo Chief Operating Officer Henrique De] Castro was ousted in January and given a $58 million severance package. Beyond the payout, two things stand out about Yahoo’s experience with its erstwhile executive: Yahoo really didn’t like him, and he should be really thankful for [Chinese e-commerce giant] Alibaba.”
So writes Joshua Brustein at Bloomberg BusinessWeek.
Brustein says that while De Castro was at Yahoo the company missed targets on various metrics, including “revenue, profit, and free cash flow,” and thus De Castro made nothing of his target performance bonus of $540,000. His salary was $600,000.
The key to his severance package, however, was his stock. When De Castro joined Yahoo the company’s stock was trading at $15.68 a share, the article says, making De Castro’s severance package worth $17 million.
So what happened? In the time De Castro was at Yahoo, its stock rose to $40.34. Furthermore, as Brustein notes, “De Castro’s termination came during a week when Yahoo’s stock was at its highest level in almost 10 years. Today the company’s shares are worth about 10 percent less than they were on the day he was fired.”
The article notes that while Yahoo’s performance under De Castro was far from stellar, Yahoo’s stock price took off because of the company’s investment in “Alibaba, the Chinese e-commerce giant whose imminent initial public offering is much more interesting to investors than anything Yahoo itself does. Depending on how you calculate it, almost all of Yahoo’s market value is driven by people looking to invest indirectly in Alibaba.”