June 6, 2006

According to documents made public last week by the U.S. Securities and Exchange Commission, Terry Semel, Chief Executive at Yahoo will now get a symbolic annual salary of just $1 through to 2008.

Additionally, for the next three years, Semel will also be eligible to receive an annual bonus of up to 1 million Yahoo shares and the option to purchase 6 million more at an exercise price of $31.59 each as a retention incentive.

Semel's new compensation package was approved May 31 by Yahoo's Board of Directors compensation committee. The board said it doesn't anticipate making any further equity grants to Semel in the next three years.

Terry Semel was the highest-paid executive in the San Francisco Bay Area in 2004 and 2005, according to a survey released last week by the San Francisco Chronicle. Semel's salary and bonus were $600,000 last year, and total compensation, including restricted stock and the estimated value of options, was $56.8 million, down from $131.2 million the year before, the study found.

Some studies show that the average pay for chief executives in 2005 was between $10 million and $15 million. The $1 salary follows moves by other tech executives, including Apple Computer CEO Steve Jobs. Google Chief Executive Eric Schmidt, and co-founders Sergey Brin and Larry Page, have also voluntarily agreed to cut their annual salaries down to that token sum. Their salary loss is more than offset by the millions the Google executives have made off stock sales.

Dan Rosensweig, Yahoo's chief operating officer, and Susan Decker, chief financial officer, each will continue to receive an annual salary of $500,000 through 2009, according to the SEC filing. Each will also be eligible for a $1 million bonus, the option to purchase 2.1 million shares of stock at $31.59 each and a performance award of 50,000 restricted stock units, the filing said.

Rosensweig's total compensation was $24.4 million last year and Decker's was $24.3 million, ranking them fifth and sixth, respectively, in the Chronicle's executive pay survey.

Yahoo Chief Technical Officer Farzad Nazem will continue to receive an annual salary of $500,000 through 2007, a potential cash bonus of $1 million, an option to purchase 900,000 shares at $31.59 each and 50,000 restricted stock units based on performance. He was ranked seventh with just more than $24 million in total compensation last year in the Chronicle survey.

General Counsel Michael Callahan received an option to purchase 330,000 shares at $31.59 each and 73,000 restricted stock units, according to the regulatory filing. He was ranked 119th in the Chronicle survey.

Yahoo's stock price has dropped more than 18 percent over the past year, but it has jumped nearly 300 percent in the five years Semel's been at the helm.

Yahoo posted first-quarter revenue in April of $1.09 billion, up 33 percent from a year ago, while net income was down year-over-year to $160 million on higher stock compensation expenses.

Source: C-Net News