When Marissa Mayer was appointed as Yahoo!’s new Chief Executive Officer, she was dead set on doing everything her way in order to revive the company’s flagging fortunes. Naturally, that included hiring new people – her own people – to help her turn things around.
One of the most notable hires was Henrique De Castro, a former executive of Google like Mayer. De Castro was appointed to serve as Yahoo’s new Chief Operating Officer, tasked with reviving the company’s failing ad business – one of its key revenue earners. Though it cost the company a small fortune to bring De Castro to Yahoo (reportedly $58 million), most people thought it was money well spent since Mayer made it seem like she knew De Castro’s prowess was exactly what the ailing company needed to survive.
Unfortunately, it looks like Mayer’s decision to bring De Castro on board was a huge mistake – with people who’ve seen the two interact during meetings noting that the pair clearly don’t get along all that well.
For months, Mayer counted on De Castro to revamp Yahoo’s advertising business, but it’s fair to say that he’s failed to do this. This led to rumors surfacing recently that De Castro might be about to get the boot, and now these have finally been confirmed.
A report from re/code.net mentioned that De Castro had been fighting for power with Yahoo’s new sales head Ned Brody. It also noted that M&A head Jackie Reses has taken over the company’s business development unit, which was previously under the charge of De Castro, and marketing head Kathy Savitt has been seeking to control Yahoo’s media unit, which is also under his leadership. In short, De Castro didn’t really seem to be getting along with many of the executives at Yahoo, but that wasn’t surprising since he was in the same situation over at Google, before he got hired by Mayer.
Though rumors were abundant, what cemented De Castro’s fate was his notable absence from major events like last week’s CES 2014.
But why fire De Castro now? It might’ve had something to do with Yahoo’s upcoming fourth quarter results, which are likely to show that the company continues to struggle. Alternatively, the move to fire De Castro might be Mayer’s way of reassuring investors that mess ups don’t go unpunished.
But as for De Castro, is he likely to care? Probably not. When he was hired in 2012, he was presented with a rich contract – an annual salary of $600,000, an annual bonus that could double that figure, $36 million in stock grants, including a one-time retention equity award of $18 million and $18 million in the form of performance-based stock options – which will leave De Castro with a VERY fat severance paycheck.
Yahoo has yet to officially announce De Castro’s firing, but in an internal memo to its employees, Mayer confirmed that he got the boot.
“The beginning of a new year always provides time for reflection. As we enter 2014, I couldn’t be more proud of what Yahoo accomplished in 2013 or more optimistic about what we’ll accomplish in 2014. I want to thank all of you for being so engaged and so thoughtful around the direction of the company.”
“During my own reflection, I made the difficult decision that our COO, Henrique de Castro, should leave the company. I appreciate Henrique’s contributions and wish him the best in his future endeavors,” Mayer wrote in the memo.
The memo also included changes in leadership. Dawn Airey, John Devine, Ned Brody, and Rose Tsou will now directly report to Mayer, while Savitt has been appointed to lead Yahoo’s media and editorial functions, and some of De Castro’s functions were given to Mike Kern.
Mayer notes that these leadership changes will “increase alignment and sharpen our media and product focus” for the betterment of the company.