Woah, *$71.7 million* that's a lot of money.
Three shareholder advisory firms — Institutional Shareholder Services, Glass, Lewis and Proxy Governance — have all recommended opposing three directors who sit on Yahoo's compensation committee. They are: Bostock, a veteran advertising executive; Burkle, a billionaire best known for his investments in the supermarket industry; and Kern, a former radio broadcast executive.
The firms concluded the trio should be punished for richly rewarding Semel despite Yahoo's struggles. In 2006, Semel received a compensation package valued at $71.7 million — more than any other CEO at the 386 publicly held companies covered in an Associated Press analysis of nation's top corporate paychecks.
Most of Semel's pay consisted of 6 million stock options given to him in exchange for agreeing to reduce his annual salary from $600,000 to $1. The committee awarded Semel another 800,000 stock options in February as his bonus for 2006 — a year in which Yahoo's stock price plummeted 35%.
The latest awards will give Semel an opportunity to build upon the nearly $450 million in gains he has already realized by exercising stock options Yahoo gave him in previous years.
"Semel is rewarded when times are good ... and when times are bad," wrote ISS, the largest of the three advisory firms.
Yahoo believes Semel's pay package is in the company's best interest because it's structured to give him a strong incentive to boost the stock price.
That's because stock options only yield profits when their exercise price is below the underlying shares' market value. For now, at least, the options Semel got last year are worthless because their exercise prices exceed the stock's market value, which was hovering around $27 last week.
In its analysis, Proxy Governance questioned whether Semel needed any more incentive to boost Yahoo's stock price. As of April 1, Semel held 17.7 million stock options eligible for exercise and 7.1 million stock options that hadn't fully vested.
"Based on his ownership in the company, Semel already should have the proper incentives ... to work toward building long-term shareholder value," Proxy Governance wrote.
Yahoo says its confidence in Semel hasn't wavered.
"Under Terry's leadership, the company has a clear strategy to create stockholder value, and the company is well-positioned to capitalize on the substantial growth opportunities ahead for the Internet," Yahoo spokeswoman Helena Maus said in a statement.
But Semel, 64, may be on a short leash after Yahoo suffered an 11% drop in its first-quarter profit while Google's earnings soared 69%. Many analysts believe Semel will face even greater pressure to surrender the reins unless Yahoo's profits accelerate in the second half this year.
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- Money, That's What I Want 22 items