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Yahoo's COO Walks Out With $20M Stock Bonus, Plus $40M For 15 Months' Work
- hkmurakami 13y agoYou know, sometimes I think that the people who play the startup game to strike it rich (a minority, but they do exist) have got it all backwards.
- checker659 13y agoNo idea what you're talking about. The number of people 'playing the startup game to strike it rich' is a minority? I mean, yeah, people want to change the world but I'm sure they want to get loaded as well in the process.
- hartator 13y agoOnly 15 months, as you can do something that valuable in 15 months. Maybe this guy is a genius with a deep expertise in something precious or maybe he doesn't really have taken any risks by himself since the beginning (cf: http://www.crunchbase.com/person/henrique-de-castro http://www.crunchbase.com/person/henrique-de-castro). Impressive CV though.
- 001sky 13y ago"We use equity grants to align the interests of employees and shareholders; without such compensation, they wouldn't take the risks they do." Wait, what?
- evincarofautumn 13y agoWell, granting stock gives some pretty serious incentive to increase the value of said stock, as an employee. Stock options aren’t quite as compelling.
- brazzy 13y agoThat "what" was, I believe, a response to the implication that they want to encourage risk-taking, something that is not generally seen as unconditionally desirable (especially in the light of recent developments).
- evincarofautumn 13y agoAh, that’s fair, I didn’t think to interpret it that way.
- bhickey 13y agoExecutive incentives are negatively correlated with company performance. There's a body of literature on this. For example: http://online.wsj.com/public/resources/documents/CEOperformance122509.pdf http://online.wsj.com/public/resources/documents/CEOperforma...
- evincarofautumn 13y agoHah, that’s actually the reason I edited to hedge with “as an employee”.
- ScottWhigham 13y agoSee argonaut's excellent post above. He does a good job of explaining the risks vs. compensation.
- ronilan 13y agoOutgoing personality. It pays ;)
- moca 13y agoHe is really good at negotiating offer letter.
- Drakim 13y agoSo that's a million dollars every week. I have a really difficult time imagining that this person was overall profitable to the company.
- colechristensen 13y agoNo human being has ever been or will ever be worth a million dollars a week. The collective dilution that this is anything but criminal is the source of a significant set of problems our society faces.
- ekianjo 13y agoNonsense. I don't know about this COO at Yahoo, but when you take decisions at the top of a multiple billion dollar company that will significantly impact the topline or bottomline of your company, of course your job is worth millions of dollars, because your level of impact is way higher than the janitor cleaning the floor in your offices.
- kamaal 13y agoYou are making an assumption that those decisions generally do something nice for the company. There is an army of people whose only known accomplishment is getting in the right place at the right purely out of luck and riding a luck wave. They themselves would have contributed nothing to the that wave. Once they do that, its often assumed that all their success was their own work. To expect such people to build anything of real value is a expectations gone too wrong. While they are at the top, they socialize with their equivalent highly paid buddies. Most of them are in the same league as their's. Its basically a mutual-protection club, in which you need to take care of each other. >>level of impact is way higher than the janitor cleaning the floor in your offices. In case of people like these, if exec was swapped with janitor, it would make 0 difference. The Janitor would probably even perform better than the exec.
- ekianjo 13y agoThats the company and shareholders problem and certainly not for you and me to decide who is at the right place or not.
- puranjay 13y agoI'm a little naive about these things. HNews, how is this possible and why would a company accept such terms? Also, are good executives really worth the money, or is this something that's just become accepted practice and companies have no recourse but to follow along? I know a lot of high-performance people, but I've never known anyone I'd give $60M for 15 months of work.
- saraid216 13y agoMy hunch is "accepted practice". Would quality executives work for a company that refused to provide that? I dunno. Perhaps. Are there executives who'd willingly work for less money in order to undercut their competition in the labor market? Probably, but are there enough to affect anything? Less likely. All guesswork. But it seems plausible to me.
- kamaal 13y ago>>Also, are good executives really worth the money I wouldn't hire these executives to do anything, let alone run a company. Most of them only get into a company because of their network. And once they come in, they have a gang of sycophants built up to assist them through their loot. They last 2-3 years any where they go. After which that 'you cant fool all the people all the time' thing kicks in and they are fired. But what's the point any way? there are enough idiots who will be ready to hire them again and they have a big enough network to help them out. >>or is this something that's just become accepted practice I attended a start up conference here in Bangalore. A exec of a big company was invited to speak. His full talk was BS, of course. But he repeatedly emphasized start up's were missing 'expert exec leadership' and VC's weren't paying up enough to ensure such leadership came on board. In short his whole talk was cribbing about how start ups were asking them to perform to get payed and were not just paying them while they wish to sleep on their jobs. >>I've never known anyone I'd give $60M for 15 months of work. Any one who is that capable is likely making doing his own work. And never this way.
- pbreit 13y agoClearly the guy is a good negotiator. And I'm not sure if you're serious regarding "$60m for 15 months of work". The idea was that he would work at Yahoo for a much longer time.
- auctiontheory 13y agoMany Googlers called this even as he was offered the job.
- deleted 13y ago[deleted]
- area51org 13y agoPlease tell me again how Marissa Mayer is an effective CEO.
- NickSharp 13y agoBut wait, there's more! According to Bloomberg, he's also receiving $64.6 upon termination, for a total of $109 Million from Yahoo! http://www.bloomberg.com/news/2014-01-15/yahoo-chief-operating-officer-de-castro-to-leave-web-portal.html http://www.bloomberg.com/news/2014-01-15/yahoo-chief-operati... Since arriving at Yahoo in November 2012, de Castro’s salary, bonuses and equity grants totaled $44.8 million ... Upon his termination, de Castro will also receive $64.6 million, including accelerated equity grants, in accordance with his contract
- adventured 13y agoYahoo's stock is up over 150% since he arrived. That no doubt has massively inflated the pay package beyond how rich it already was.
- verytrivial 13y agoExecutive compensation committees are stacked with people lining other people's nest on the expectation that they themselves will be moving in soon, if not to the same position, some another that has a compensation level that has similarly drifted into the stratosphere.
- peg_leg 13y agoThis is nothing more than legalized theft, nothing more.
- argonaut 13y agoThe rationale for these kind of severance packages is that this is what it takes to hire a top executive away from a top company and into a entirely new role at a riskier company. When an executive leaves a top job to join a new, undefined, risky role at a riskier company, they do so knowing: 1) they will not get that (relatively safer) top job back, a job that represents all the years they spent ascending the org chart, 2) they might not survive in their new job, especially if it comes with performance targets [1], and 3) getting fired for poor performance will permanently tarnish their (previously skyrocketing?) reputation. With that in mind, these executives will always get a golden parachute in their contract. [1] I'd be interested in seeing data on how many executives do survive in these situations. I wouldn't be surprised if the data showed that a large (~40%) proportion do not hold onto their positions.
- thethimble 13y agoFrom Yahoo's perspective, was the investment worth it?
- ilovecookies 13y agoConsidering the stock went up 150% would say so, from a PR point of view, definitely not.
- markerdmann 13y agoAt least as of July 2013, the appreciation in the stock price was due to the increase in the value of Alibaba and Yahoo Japan. "But Yahoo’s turnaround remains very much a work in progress. Although Yahoo’s stock price has soared by a whopping 73% since Mayer become CEO, that gain is almost entirely attributable to investments the company has in two Asian companies, the Chinese e-commerce giant Alibaba and Yahoo Japan. Yahoo’s core advertising business remains sluggish amid intense competition from rival Internet giants like Google and Facebook." http://business.time.com/2013/07/16/yahoo-ceo-marissa-mayers-one-year-report-card-the-clock-is-ticking/#ixzz2qYNSfRHR http://business.time.com/2013/07/16/yahoo-ceo-marissa-mayers...
- michalu 13y agoWow, corporate parazites. This is why I simply struggle to be anything else than entrepreneur. It sickens me to see how these "managers" screw stockholders and employees.
- Kequc 13y agoThe amounts of money that float back and fourth in america's top 1% is excessive. I'm not sure if this issue fits here but lately it feels like it fits everywhere. Start voting for people that will do something to fix wealth disparity.
- xacaxulu 13y agoI'm not gonna hate on the dude for making money. It doesn't look like he did anything illegal. If anything I'd like to have a coffee with the guy just to learn from him.
- collyw 13y agoThe debate seems to be more whether he earned the (imho outrageous amount of) money he made, or just turned up and received it.
- ilovecookies 13y agoThis is only news because it has to do with a major tech company and not a minor one. It's probably some of the google stocks the company had that's the stock bonus. Comparing to the income CEOs in the tech industry this is actually nothing special at all, unless we talk about major companies, like yahoo. Four of the lower CEOs at google got about 128 million this year. CEOs of other major tech companies are billionaires in NETWORTH but at least they now the PR value of not giving their CEOs this much money. Examples of billionaires that have a relatively low pay, Sergei and Larry (1$), Steve Ballmer (1 million $) and the amazon CEO (about 50k $).
- krick 13y agoIf you followed the other links on that page it becomes a little clearer ( http://www.businessinsider.com/after-only-15-months-marissa-mayer-fired-her-first-major-hire-2014-1 http://www.businessinsider.com/after-only-15-months-marissa-... http://www.businessinsider.com/how-yahoos-new-coo-got-his-62-million-pay-package-in-7-simple-steps-2012-10?utm_source=hearst&utm_medium=referral&utm_content=allverticals http://www.businessinsider.com/how-yahoos-new-coo-got-his-62... and http://www.businessinsider.com/yahoo-coo-henrique-de-castro-2012-10 http://www.businessinsider.com/yahoo-coo-henrique-de-castro-... ). By the way I recommend you to watch that 2-minute video fragment in the last one. It really helps to get grasp of what is he like. So, first off it isn't that surprising that he gets all that money after all (it's kinda natural because he is fired). Also, as he is fired, his work at Yahoo obviously wasn't worth that kind of money. But while these money aren't disaster for Yahoo, just to think of it — it's huge. I wonder what he was actually supposed to do to somebody (Mayer) would like to pay him that kind of money so he would work for Yahoo. I mean, yeah, we all know that operating business like Yahoo isn't kids game, but just think of it: why nobody gives you that money so you would work for them?
- Jare 13y agoIf I was an investor and someone introduced me to our new COO with that video, I think I'd run out of the room screaming "To the boats!"
- r0h1n 13y agoWith De Castro's exit Mayer has 'aided' a massive transfer of wealth from Yahoo! shareholders in less than 2 years to people who appointed her, as well as people she appointed. Dan Loeb, who helped appoint Mayer as Yahoo! CEO, made a killing on his investment thanks to Mayer: http://www.theverge.com/2013/7/22/4545072/yahoo-dan-loeb-leaving-marissa-mayer-profit-flip-third-point http://www.theverge.com/2013/7/22/4545072/yahoo-dan-loeb-lea... Then there's De Castro, who Mayer handpicked as one of her early and critical hires. He apparently made $109 million, not $60 million: http://www.bloomberg.com/news/2014-01-15/yahoo-chief-operating-officer-de-castro-to-leave-web-portal.html http://www.bloomberg.com/news/2014-01-15/yahoo-chief-operati... One almost thinks his compensation was designed to maximize his earnings were he to fail in the shortest possible period of time!
- mtrimpe 13y agoMarissa was appointed to achieve the near impossible task of turning around a massive behemoth which seemed dead-set on a course towards oblivion. The only key asset that still gave Yahoo significant leverage was its war chest and rather than let it dwindle she decided to invest it in a number of bold steps to achieve a dramatic shift in corporate culture. While some of these steps are indeed turning out to have been mistakes I find I hard to argue, keeping Occam's razor in mind, that her actions did not keep the best interest of the shareholders in mind, especially given Yahoo's performance on the market.
- swframe 13y agoInstead of wondering why he was paid that much, we should be discussing how to get from where we are, to where he is? What does it take? Why is it that so few of us are doing that?
- truthteller 13y agomostly luck
- rightprice 13y agoTo all the people who call this irrational, theft, etc. This is a "free" world. You are also able to work your way to the COO level and get such bonuses.