Saturday, March 03, 2007

$26 Million to Semel in Year when Yahoo! loses 34%

Yesterday, Yahoo! disclosed in a filing with the SEC that it paid Terry Semel, its Chair and CEO, $25.7 million for his efforts in 2006.

The good news for Yahoo! shareholders? Yahoo!'s Compensation Committee showed more discretion this year, as this was a 52% reduction in his annual compensation compared to 2005 (a year in which the stock rose just under 4%).

The bad news for Yahoo! shareholders? This $26 million is substantially more than the earlier reports that he would receive an annual salary of $1 (with, of course, some fine print connected to that number). It's also on top of his total Yahoo! tenure compensation of $550 million (as detailed in our recent "Plan B" submission to Yahoo!'s Corporate Secretary).

Few would argue that Mr. Semel is in the twilight of his career. What's ominous to Yahoo!'s shareholders, though, is what might be in store for his severance/retirement package. Bob Nardelli received a $220 million package after 5 years, but far less compensation than Mr. Semel beforehand. What will Mr. Semel get?

What's also troubling in this disclosure by Yahoo! is how this amount of compensation was determined. If driving your stock's price down by 34% in 2006 is worth $26 million and having it rise less than 4% in 2005 is worth $49 million, does that mean that, if Yahoo!'s stock remains up 19% for 2007, shareholders will have to pay Mr. Semel $100 million for this year?

Yahoo!'s Compensation Committee -- Arthur Kern, Roy Bostock, and Ron Burkle -- should provide some answers to these questions. Was there a risk -- as apparently there was in 2004 -- that Disney or another competitor might again swoop in and hire away Mr. Semel, requiring "aggressive action"?

What's a Yahoo! shareholder to do? There is a better way for all Yahoo! users, employees, and shareholders. Read up and support "Plan B" for Yahoo! at this spring's annual meeting of shareholders.

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