During a time period when activist shareholders are becoming more proactive in seeking change — and companies are responding in kind — limiting executive pay models is becoming a rallying cry for many dissatisfied shareholders. However, an April 17 filing by Yahoo Inc. proves that executive compensation may not be done climbing quite yet.
Yahoo CEO Marissa Mayer announced in an internal email during the week, “I made the difficult decision that our COO, Henrique de Castro, should leave the company.” However, in the following regulatory filing, the company announced that de Castro would be given $58 million as a severance package from the company, one of the largest such packages in U.S. history.
Many company executives are given top severance packages due to retirement or other mitigating factors. But in terms of performance-based termination, Gary Hewitt, the managing director and head of research at GMI Ratings, told CNN, “de Castro's exit package is definitely at the top end of the severance we have seen.”
Henrique de Castro only worked 15 months at Yahoo after coming over from Google in November 2012. Upon his hiring, Yahoo estimated that his yearly compensation for 2012 would be $39.2 million, largely due to a $20 million one-time payment for bonuses he missed at Google by switching companies. In 2013, however, the board denied de Castro any bonuses, saying it “believed he did not meet the performance standards necessary to receive an annual bonus.” In total, Aaron Boyd, Equilar's director of governance research, told CNN that de Castro’s total Yahoo compensation could equal about $109 million.
The ousted Yahoo executive is not the only one under fire for a large golden parachute despite a short time at work, however. Through the terms of the Comcast/Time Warner Cable merger, former Time Warner CEO is set to make $79.9 million as a severance payment from the company despite being in the CEO position a mere six weeks before the merger. That deal is still under regulatory scrutiny.
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