Yahoo’s Exec Departures: Brain Drain or Natural Exodus?

While talk of Yahoo’s executive moves lately has focused on the departure of CEO Terry Semel and his replacement by co-founder Jerry Yang, at least ten additional execs have moved to other firms in the last few months, many to much smaller startups. Even before the CEO switch-up, analysts and media outlets made allusions to a “Yahoo brain drain.”

Execs have taken on new positions at companies including small ad network AdBrite, online video outfit Veoh and most recently Publicis Groupe’s digital consultancy Denuo, which launched last year.

In May, SVP and GM of Yahoo HotJobs Dan Finnegan said he’d leave the firm. Later that month CTO Farzad Nazem announced he’d depart Yahoo to spend more time with family.

Next came U.S. Chief Sales Officer Wenda Harris Millard, who decided to quit Yahoo after over five years with the firm. Millard has since gone on to head Martha Stewart Living Omnimedia as president.

July brought a wave of goodbyes and new CEOs. Yahoo’s former Madison Ave liaison Jerry Shereshewsky, who had reported to Harris Millard, became CEO at, a social network site for baby boomers. Also that month, ex-Yahoo ad exec Steve Mitgang took the CEO seat at Web video startup Veoh; since then former Yahoo Communications Director Gaude Lydia Paez has agreed to head up PR at Veoh. In addition, Bill Demas, SVP and GM for Yahoo’s publisher network group, moved in July to virtual computing firm Moka5 to fill the CEO spot. It was also reported that ex-GM of Yahoo Local Paul Levine would shift to a position with ad network AdBrite.

“When a company is going through some changes…we tend to see more resumes from those firms,” said Tim Welo, senior recruiter at Victoria James Executive Search, a recruitment firm specializing in the Internet industry, among others. Though he wouldn’t speak to Yahoo specifically, he did speak on more general terms. “When something’s going on,” he continued, “the smart people look early, the less smart people wait a little longer, and some people put their heads in the sand.”

Another four moves have taken place so far this month, including the most recent transition by former Yahoo Media Group Executive Producer Todd Krieger, who will now work with Publicis Groupe’s Denuo as SVP. Yahoo Media Group exec Geraldine Martin-Coppola meanwhile has ditched Yahoo for a gig as head of interactive for BermanBraun, a production firm co-founded by her former colleague and media group head, Lloyd Braun.

Organizational confusion probably isn’t helping. Yahoo announced a major restructuring in December. The company decided to reorganize into three operating groups, an Audiences Group, an Advertiser and Publisher Group and a Technology Group. Former Yahoo CFO Susan Decker was named as the Ad and Publisher lead. Then-CTO Farzad Nazem was to continue heading the tech division, but he’s since parted ways with the firm.

As for the Audiences segment, the company said in December it was on the lookout for someone to run it. Also at that time, Yahoo COO Dan Rosensweig said he’d quit; he’s since taken the position of operating principal at buyout firm Quadrangle Capital Partners.

Then the plates shifted yet again. Decker was named President, and is now heading both the Advertiser and Publisher as well as the Audiences Groups. This eliminates the need to seek out a head for the Audiences Group, and, as a Yahoo spokesperson told ClickZ, “eliminates an extra layer.”

Which brings us all the way back to the “Peanut Butter Manifesto,” a leaked internal memo attributed to a senior exec who bemoaned, among other things, the “massive redundancy that exists throughout the organization” at Yahoo. The “overly bureaucratic” structure and “overlapping responsibilities,” wrote the exec, “slows us down and burdens the company with unnecessary costs.” Lack of recognition for top performers and a history of rewarding weak ones, the author continued, had led to “employees that we really need to stay (leaders, risk-takers, innovators, passionate) [to] become discouraged and leave.”

“Yahoo has really great people,” said a former Yahoo executive who asked to remain anonymous. “But if times start getting a little tough, it’s those great people who have opportunities on the outside.” The source said most ex-Yahoos probably aren’t bitter towards the firm; they just “want to see growth and think they’re making an impact on that growth.”

Some observers see the exodus as part of the natural flow that occurs when a company comes under new leadership, as it did when Yang took over in June.

“Isn’t there a new guy in charge for a reason?” asked JupiterResearch Analyst David Card, who said it doesn’t make sense for people to be overly concerned about people leaving Yahoo. Considering the struggles the company has been experiencing, even with its core display ad business, he added, “Maybe they should shake things up a little bit.”

According to a Yahoo spokesperson, the firm has hired several new execs recently. “Yahoo continues to attract top talent across all areas of the company, and nearly 90 percent of the job offers we extend are accepted,” wrote a Yahoo spokesperson in an e-mailed statement.

One anonymous ex-Yahoo exec told ClickZ he realizes a lot of industry watchers are down on the company these days, but wondered, “Do they want everything to go through Google?”

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