Thursday, February 22, 2018
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Firing gave executive a reason to scream 'Yahoo!'

Henrique de Castro may have worked at Yahoo for just 15 months. But they were very lucrative ones.

In an Securities and Exchange Commission filing Wednesday, Yahoo revealed that the severance package it awarded de Castro, the former chief operating officer who left the company in January, was worth $58 million. That's more than three times the $17 million at which it was initially signed.

All this for a guy who wasn't even CEO.

De Castro, who was personally poached from Google by Yahoo CEO Marissa Mayer. Ultimately, Henrique was not a fit and that's a very regrettable conclusion," Mayer told analysts after she fired him. (She has yet to replace him.)

The eye-popping size of de Castro's golden parachute tells us three things:

De Castro is the lucky beneficiary of good timing, as Bloomberg Businessweek has noted. The stock, boosted by the company's stake in Alibaba — the Chinese e-commerce giant that is planning an IPO — was hovering around its highest prices in years when de Castro was ousted. As Yahoo's filing states: "The stock price appreciated nearly 160 percent between the date of his offer letter and the date of his termination."

De Castro made out so well in part because Yahoo had to pay up to recruit him from Google. A little more than $31 million of the $58 million package was in the form of what the company called "make-whole" restricted stock units. The proxy explains that these were needed to "buy out compensation value that the executives forfeited upon leaving their prior employers."

De Castro's package is a reminder that such first-class escape hatches are likely to keep surprising investors as long as big equity awards are part of the picture. The overall value of golden parachutes — which have come to mean both pay in the event of a forced departure and in the case of a merger or acquisition — may have remained basically flat. And companies may be bowing to shareholder pressures and public scrutiny on certain features, such as paying out less cash or covering executives' excise taxes less frequently.

But in de Castro's case, $56.8 million of the $58 million package was in the form of equity. As long as piles of stock options and restricted shares remain part of the package, some very soft landings for senior executives are going to stick around.

For what it's worth, according to simplyhired.com, the average Yahoo salary is $61,000.

Contributing: Time.com

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