Tim Armstrong, onetime Google executive and former CEO of AOL and its successor, Verizon’s troubled, digital media-focused Oath group, departed Verizon in 2018 just months before the corporation took a $6 billion accounting charge on Oath.
According to a Tuesday report in the Wall Street Journal, he’s walking away with a staggering $85 million-plus payout.
The Journal wrote that most of that golden parachute comes from equity he was granted when Verizon bought AOL in 2015 for $6 billion, a decision the company now likely regrets. The rest of the pile comes from executive pay and severance, the paper reported:
The cash and stock awards and other benefits, pieced together from disclosures in a securities filing late Monday, are a combination of Mr. Armstrong’s 2018 compensation, severance and a special incentive package that Verizon granted Mr. Armstrong when it bought AOL in 2015.
… Most of Mr. Armstrong’s compensation for 2018 and 2019 comes from a so-called founders equity award he was granted when Verizon bought AOL. The first part vested last spring and the remainder is set to vest in coming months, according to regulatory filings… Mr. Armstrong received $31.1 million from the founders award last year and stands to get another $23 million in June if the value of the media group is unchanged from the end of 2018, a Verizon spokesman said. In all, he would get about 80 per cent of the founders award.
In the year 2000, AOL agreed to buy Time Warner for $232 billion. Shortly after Armstrong joined the company in 2009, it was Time Warner spinning off AOL, with Reuters reporting that the AOL’s market capitalisation had plunged to a pitiful $5 billion.
In 2011, leaked documents showed that Armstrong was pushing a massive increase in content quotas on editorial staff, with one of those staffers telling Business Insider that AOL was “the most fucked-up, bullshit company on earth.” In 2014, Armstrong was heavily criticised for blaming the sick babies of two AOL staffers for increasing health care costs at the company.
In early 2015, Quartz reported that a significant portion of its business still relied on revenue from legacy customers who were still paying for dialup internet service. However, Wired noted its advertising business was beginning to grow quickly.
That turnaround didn’t last. Verizon purchased AOL in 2015 and later bought out Yahoo in 2017 for just shy of $6 billion.
Armstrong headed up Oath, a unit set up to merge both AOL and Yahoo. Oath (as of January 2019, Verizon Media) owns numerous media operations including HuffPost, TechCrunch, Engadget, and Yahoo! News; it was supposed to be an ad platform-media hybrid challenging Silicon Valley giants by making ample use of Verizon subscriber data to target ads at its web audience.
As CNN noted, Oath never really did anything to challenge the Facebook-Google online ad duopoly. By late 2018, there were rumours that Verizon had considered spinning off the unit entirely, its streaming video ventures had failed, and the Washington Post reported that its share of the digital ad market was shrinking as Amazon and Snap Inc.’s shares grew.
After announcing the multi-billion-dollar writedown, the unit began laying off around 7 per cent of its staff.
Verizon has since announced it plans to focus on wireless technology, rather than its media holdings.