SUNNYVALE -- In a move that signals trouble for CEO Marissa Mayer's attempts at a financial turnaround, Yahoo (YHOO) said Wednesday that its highly paid chief operating officer is leaving the company just 15 months after he was hired.
Henrique de Castro, a former top Google (GOOG) executive, was recruited by Mayer to oversee Yahoo's ad business and was given a pay package worth up to $62 million over four years. Mayer reportedly had grown dissatisfied with his performance, however, as Yahoo's online ad business continued to sag.
"This is probably not a good sign for fourth-quarter ad sales," said Colin Gillis, an Internet stocks analyst for BGC Partners, who noted that Yahoo is scheduled to report later this month on its earnings performance for last year's fourth quarter.
Yahoo and de Castro gave no reason for his departure. But the company has been struggling to reverse a steady decline in ad sales -- its primary source of revenue -- at a time when the online advertising business is generally booming and other tech giants such as Google and Facebook are reporting steady growth.
Mayer, herself a former top Google executive, has led a high-profile turnaround effort at Yahoo since she became CEO in July 2012. She's made a flurry of acquisitions and overhauled products, while promising that advertisers will return when they see more people visiting Yahoo's websites and using its new mobile apps.
But industry publications reported last fall that Mayer was growing impatient with de Castro's progress in rebuilding its advertising division. Critics also said de Castro's personal style, which has been described as highhanded, wasn't winning over ad buyers.
Analysts expect Yahoo to report $1.2 billion in revenue for the fourth quarter, down slightly from a year earlier. Yahoo disclosed a 7 percent drop in sales of online display ads in its last earnings report, after similar declines in previous quarters.
"Yahoo has done some nice work" on the new mobile apps and revamped websites, Gillis said. "But in terms of moving the needle on revenue and the view from advertisers, broadly speaking, nothing has gotten better."
De Castro's lucrative hiring package meant that he earned more in his first year at Yahoo than Mayer herself. The company valued his compensation for 2012 at $39 million in cash and stock grants, while Mayer received $36.6 million.
His agreement provided additional stock grants over the next three years, but at least some of those grants will vest immediately upon his termination.
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