Ouchy, Yahoo! fired its COO for not delivering

There is trouble in paradise. Yahoo! COO Henrique De Castro has been asked to leave the company by CEO Marissa Mayer, who brought the former Googler into the fold. The company made the announcement via a regulatory filing that noted that De Castro would depart the company but will receive his full severance package as per his 2012 contract.

By the look of it, things just weren’t as great as it seemed at camp Yahoo!. According to a Recode report, de Castro was not performing and failed to bring Yahoo!’s ad business up. There are also rumours of a power struggle between De Castro and many departments heads in Mayer’s inner circle.

In a leaked memo to Yahoo staff about the axing of the COO Mayer, assures Yahoos that she is confident that the new leadership team will successfully execute the company’s new direction.

“I am confident that the leadership team, our direction, and these changes will enable even more successful execution. Thank you for your patience and understanding as we work through these changes.”

It seems a decision had to be made on De Castro before Yahoo!’s earning call. The company lost its position as the second ad reseller to Facebook under De Castro watch.

“Over the past year, Yahoo lost its position as the No. 2 digital ad seller in the United States to Facebook, according to the research firm eMarketer. Yahoo had just 5.8 percent of the market, compared to 7.4 percent for Facebook and 39.9 percent for Google. The company posted similar declines overseas,” reports the New York Times.

De Castro was Mayer’s first major hire and will walk away with US$40-million payday as per his severance agreement.

See Mayer’s full memo below (hat tip: Recode).

YAHOO PROPRIETARY AND CONFIDENTIAL — DO NOT FORWARD

The beginning of a new year always provides time for reflection. As we enter 2014, I couldn’t be more proud of what Yahoo accomplished in 2013 or more optimistic about what we’ll accomplish in 2014. I want to thank all of you for being so engaged and so thoughtful around the direction of the company.

During my own reflection, I made the difficult decision that our COO, Henrique de Castro, should leave the company. I appreciate Henrique’s contributions and wish him the best in his future endeavors.

Effective today, we will restructure the leadership of the operating organization as follows:

– Dawn Airey, John Devine, Ned Brody, and Rose Tsou will report directly to me.

– I’ve asked Kathy Savitt to lead our media and editorial functions.

– Several functions in the COO org align well with product initiatives in Mike Kern’s Homepages & Verticals group and will report there moving forward.

We’ll reach out to specific individuals on reporting changes. As always, there may be further changes to increase alignment and sharpen our media and product focus; those changes will be messaged within the affected groups.

Overall, I am confident that the leadership team, our direction, and these changes will enable even more successful execution. Thank you for your patience and understanding as we work through these changes.

Marissa