“Dead Man Walking” Walks: COO Henrique De Castro Out at Yahoo
As has long been rumored, Yahoo COO Henrique De Castro is departing Yahoo.
I had reported last week that he was in big trouble — he was not in attendance at any major events at CES that Yahoo had at the high-profile event, as he had been last year — and was working on a story about his expected departure. Yahoo had declined to return a number of emails this week about his status.
Now we know why. According to a regulatory filing, De Castro is toast as of tomorrow.
Yahoo PR will likely try to put a pretty face on this departure. But he was fired, except he will get a very big severance per the rich contract he was awarded when he was hired in late 2012 from Google.
[Update: In an internal memo, Yahoo CEO Marissa Mayer confirmed the firing.]
Consider: His total compensation in 2012 was close to $40 million.
This is clearly a big correction for CEO Marissa Mayer, since De Castro was her first major hire to be her No. 2.
Interestingly, despite giving off the impression they did, the pair actually did not work closely at Google, according to dozens of sources there. Therefore, Mayer did not seem to grok the many signals that De Castro had a troubled time there near the end of his tenure.
Considered whip-smart and clever, the former business consultant also made a number of powerful enemies at Google, including top ad product execs Susan Wojcicki and Neal Mohan, among many others. In preparation for a longer article I was working on about him, I had done dozens of interviews about De Castro’s time there and few — even those who liked him (and he can be very charming personally) — were positive.
The move to remove him is also not unexpected within Yahoo and increasingly without. Insiders at the company had taken to calling him “Dead Man Walking” to me many times in recent weeks and De Castro himself had begun to reach out to many Internet execs for advice.
Ad industry people had also told me that De Castro had disappeared from the scene, too, despite a lot of prominent appearances only months ago. I saw him at a Silicon Valley event in December and he seemed less flashy and ebullient than he had been in the past. (He also talked to me, which is a Yahoo no-no under Mayer, so I figured something had to be up.)
Why jettison him now? Because Yahoo is set to announce its quarterly results later this month and most expect them to continue to lag the Internet industry badly once again. A person close to the Yahoo board had told me a week ago that De Castro’s fate would be settled before that report came out.
In addition, De Castro — who was a polarizing figure at Google, where Mayer had hired him from — quickly became the same polarizing figure at Yahoo.
Perhaps most problematic: In recent months, according to numerous sources, he and Mayer had developed a tense relationship that many in meetings with the pair found it hard not to notice. “They just did not get along and did not hide it at all,” said one person in several meetings. “It was really awkward.”
He had also been fighting for power with the new sales head Ned Brody, M&A head Jackie Reses and marketing head Kathy Savitt. In other words, everyone inside the Mayer inner circle.
In fact, Brody, a former AOL exec, had rolled his eyes to many who asked about De Castro’s absence at CES and his status. Savitt had been seeking control of Yahoo’s media unit, which had been under him. And Reses had long since grabbed Yahoo’s business development unit, another former De Castro charge.
In other words, “Boardwalk Empire,” but without the cool clothes and snappy banter.
Besides these interpersonal issues, perhaps most critical was that De Castro was unable to move the advertising business, which has continued to lag as Mayer’s two-year anniversary nears.
That pressure to perform in the advertising space has caused a lot of tension inside Yahoo, said a multitude of sources, especially between Mayer and COO Henrique De Castro. Sources present at a number of meetings both attended said the relationship had become less cordial than previously and that Mayer has begun to significantly insert herself in content and media efforts.
Mayer brought De Castro over from Google, where she was also an exec, last year, with the hope that he would be able to turbocharge the struggling ad business at Yahoo. Despite a giant paycheck she gave him and a lot of internal rejiggering, that has not happened as yet, and it has caused the persistent rumors of his departure to surface periodically inside and outside the company.
The noise has gotten louder recently, perhaps in anticipation of the fourth-quarter results, though he might be redeemed once Stream Ads kick in. In addition, De Castro still has not replaced former Yahoo media head Mickie Rosen — a key job — since last year, which has also prompted speculation about his ongoing role. Many sources said De Castro’s relations with Ned Brody and Kathy Savitt have also become tense, with Savitt angling to take over media and Brody more prominent as the face of Yahoo’s ad push. Brody came to Yahoo after a tussle with AOL, his former employer, to run ad sales.
Where all this jockeying — and it is just that, no matter what Yahoo PR puts out — leaves De Castro is anyone’s guess at this point.
Where it leaves him is with a big pile of Yahoo’s money for very little results.
Where it leaves Yahoo is without a No. 2, although I don’t expect Mayer to replace him.
Here is Yahoo’s filing with the Securities and Exchange Commission about De Castro: