Yahoo CEO Marissa Mayer is cutting loose her top lieutenant in a possible sign that the Internet company’s efforts to revive its long-slumping advertising sales are not paying off.
Wednesday’s surprise announcement of the departure of Yahoo chief operating officer Henrique de Castro represents a setback for Mayer, who signed him to a US$58 million deal just 15 months ago to help her lure more advertisers to a company that has been struggling to compete against Google Inc and Facebook Inc for online marketing dollars.
Yahoo Inc declined to comment on the reasons for De Castro’s abrupt exit. Mayer did not name his replacement.
It is doubtful De Castro would be leaving if he were bringing in the revenue that Mayer envisioned, BGC Financial analyst Colin Gillis said.
“This was one of her key hires and he is already gone,” Gillis said. “It doesn’t look good.”
Mayer, who knew De Castro from the days when both executives worked at Google, will likely be questioned about what went wrong when she reviews Yahoo’s financial results for the fourth quarter, scheduled to come out Jan. 28.
The company has not warned that it missed its revenue forecast for the three-month period ending last month, an indication that Yahoo must have at least been reasonably close to hitting that financial target set by Mayer. Yahoo had projected fourth-quarter revenue of about US$1.2 billion after paying commissions to its ad partners, unchanged from the previous year.
De Castro, 48, will leave Yahoo with much of the money and stock that he received when Mayer lured him to California from a Google advertising job in Europe. His severance package includes US$20 million of restricted stock that was not scheduled to fully vest until late 2016. He will also receive US$1.2 million to cover the next two years of his salary. His rights to another batch of restricted stock valued at US$9 million also have vested.
Although De Castro’s hiring turned out to be an expensive mistake, Mayer is unlikely to face a harsh backlash from Yahoo stockholders.