The $100 Million Lesson - Somebody needs to police executive compensation

Another ridiculous compensation package? Yahoo, already in enough trouble, just fired Henrique do Castro, hired in October 2012 to help turn the company around, and paid him $100 Million for only 15 months of work!

This is on top of recently hiring Katie Couric, the TV personality, to help promote the brand. How long will she last?

What is the Yahoo Board thinking hiring these kind of people for such extravagant compensation packages and senior executive positions? Who on the Board is approving spending these ridiculous amounts of their shareholder’s money?

Is the CEO running the Board at Yahoo, or vice versa? These kinds of incidents aren’t new to the Yahoo Board. The previous CEO, Scott Thompson, was forced to resign amidst a scandal not too long ago.

The Board of Directors of any company has a fiduciary responsibility to the owners of the company – the shareholder’s. Boards have an obligation to question their CEOs when anything seems suspicious, especially on huge compensation issues like these.

Compared to similar senior executive compensation amounts in Silicon Valley, Mr. de Castro’s pay package was excessive, to say the least. He was even being paid more than his boss?

When hired, Yahoo’s CEO Mayer said, “Henrique is an incredibly accomplished and rigorous business leader, and I am personally excited to have him join Yahoo’s strong (?) leadership team. His operational experience in Internet advertising and his proven success in structuring and scaling global organizations make him the perfect for Yahoo as we propel (?) the business to its next phase of growth.”

Announcing his departure, she said, “the best way for the company to grow was without him.” Wow, what a change of heart in such a short period of time? Who was measuring his performance – the CEO? The Board?

This whole scenario should make the shareholder’s wonder, “how long is Katie Couric going to last?” What is her job and who is measuring her performance? How much will she walk away with of the shareholder’s money in a few months?

There is a serious mismatch when it comes to executive compensation and performance in Corporate America, and no one seems to be able to control it. Shareholder’s need to be more critical and questioning of the Boards who are responsible for managing their investments.


Robert M. Donnelly is the author of: Guidebook to Planning - A Common Sense Approach, an educator: Professor of Entrepreneurship & Innovation at Saint Peter's University, and a brand builder and marketing expert. His new book: Personal Brand Planning for life is a guide for anyone w...

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