The officials say the man was killed today by a militant firing squad and his body was hung from a street light pole for public display in the town of Shahr in the southeastern Hadramawt province.
An al-Qaida flier distributed to residents said the execution was in "retribution" for anyone who deals with the Americans.
It claims the man, who was not identified, had been placing microchips in cars and safe houses used by al-Qaida members to guide missiles fired by US drones.