AABA Altaba Inc

By Sarah Krouse 

Tim Armstrong, the former leader of AOL, is walking away with more than $60 million as he leaves Verizon Communications Inc., which recently wrote down half the value of the internet business he led.

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.

Mr. Armstrong formally departed Verizon at the end of 2018, but stepped back from running its internet unit months earlier, passing the reins to K. Guru Gowrappan. That business, now called Verizon Media Group, booked a $4.5 billion accounting charge in the fourth quarter after failing to meet its revenue targets and laid off some staff.

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 $16.6 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% of the founders award.

Mr. Armstrong declined to comment. The former Google executive joined AOL in 2009 a few months before it was spun off from Time Warner Inc. and led a turnaround that doubled the stock price and resulted in the $4.4 billion sale to Verizon. He joined Verizon and later helped steer the Yahoo acquisition.

Under former Verizon Chief Executive Lowell McAdam, the legacy AOL and Yahoo web properties were combined in a new digital media and advertising division, called Oath, that was run by Mr. Armstrong. Verizon spent about $9 billion between 2015 and 2017 to buy both AOL and Yahoo -- seeking to loosen Facebook Inc. and Google's grip on marketers and consumers.

But Verizon and Oath executives disagreed over what some employees within the digital-ad unit saw as an overly conservative approach to using wireless subscriber data to boost Oath's advertising revenue and how best to distribute media through Verizon devices.

The business struggled to meet revenue projections. It is now looking beyond its initial advertising and data-centric strategy for revenue, pushing further into e-commerce and subscription services.

In addition to the founders award, Mr. Armstrong received $12.5 million in 2018 compensation including $6.3 million in cash severance. As part of the severance agreement, Mr. Armstrong agreed not to recruit customers or employees from Verizon or directly compete with its business for one year.

The new head of Verizon's media and advertising unit, Mr. Gowrappan, made $12.8 million in 2018, the carrier said in Monday's filing. He became chief operating officer of the unit in April and was promoted to chief executive of the unit in October.

Mr. McAdam, who stepped down as Verizon's CEO on Aug. 1, got $18.7 million in 2018 compensation. Verizon's new CEO Hans Vestberg was paid $22.2 million last year.

Officials in charge of compensation at Verizon in the filing called the media unit's current revenue target "attainable, but challenging in light of the business environment."

Write to Sarah Krouse at sarah.krouse@wsj.com

(END) Dow Jones Newswires

March 19, 2019 13:11 ET (17:11 GMT)

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