Netflix, Inc. (NASDAQ:NFLX) has taken issues with its former executive who was hired away by Yahoo! Inc. (NASDAQ:YHOO). The streaming video company sued Mike Kail over allegations of taking bribes from vendors to award business. Kail was hired by Yahoo! Inc. (NASDAQ:YHOO) as Chief Information Officer or CIO. Bloomberg’s Emily Chang discussed the development on Bloomberg West with David Kirkpatrick, Bloomberg Contributing Editor and Om Malik of True Ventures.
The latest development brings a fresh headache for Yahoo! Inc. (NASDAQ:YHOO)’s boss, Marissa Mayer. She recently parted ways with another CIO, who took with him nearly $100 million in breakaway compensations.
“These are devastating allegations and they seem to be very well substantiated based on the complaint with the e-mails that are printed etc. You cannot expect that he is very long for his job at Yahoo! It sounds like its illegal on top of having effectively stolen based on what Netflix is accusing him […],” Kirkpatrick observed.
Kirkpatrick also noted that the development cast the major technology companies in a bad light. He said such companies are powering the modern life, but their behaviors continue to raise a lot of questions.
Kail is just four months into his job with Yahoo! Inc. (NASDAQ:YHOO) from Netflix, Inc. (NASDAQ:NFLX). It is believed that Kail’s alleged irregular practices at Netflix fetched him between 12-15% of illicit commissions for contracts awarded to some two IT firms. It is believed that Kail obtained a total of $0.5 million through such unauthorized dealings.
“The complaint is pretty specific and you know, I think David [Kirkpatrick] has made a very valid point. We are coming to a very different time in the technology industry. It is uncharted waters for all of us. People are doing things which I guess people do like sometimes being morally ambiguous, and I think that is what you see with the case […],” stated Malik.
Although there have been troubles with CIO hires at Yahoo! Inc. (NASDAQ:YHOO), Mayer may not be to blame for the problems, especially in the latest case that involves Kail and Netflix, Inc. (NASDAQ:NFLX). Kirkpatrick said that judging Mayer on the basis of the Kail hire would be unfair because out of 30 or 40 big hires only two or three have had unwanted issues.
“At the end of the day, we need to spend our time delivering. Again, for all those users, advertisers and shareholders and we think that people will be focused on our results as opposed to on anything else,” said Kathy Savitt, Yahoo! Inc. (NASDAQ:YHOO) CMO and Head of Media.
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