Yahoo drops CEO's salary to $1
Board of directors has shrunk Semel's salary, while boosting his future compensation through stock options.Updated: Jun 05, 2006 12:04 IST
Yahoo Inc said on Friday its board of directors has shrunk Chairman and CEO Terry Semel's annual salary to $1, while boosting his overall future compensation through stock options and grants.
In a filing with the US Securities and Exchange Commission on Friday, Yahoo said its board had approved two days before a long-term executive retention plan where Semel will receive $1 for each of the next three years through 2008.
His salary in each of the past three years was $600,000.
Yahoo is not unique among Silicon Valley companies in deemphasising salary and linking compensation to company performance in the form of share bonuses.
Since 2004, Google Inc, Yahoo's biggest rival, has paid $1 in salary to its top executives -- co-founders Larry Page and Sergey Brin and CEO Eric Schmidt -- compensating the three billionaires instead through stock options and grants.
The world's largest Internet media company said Semel stands to benefit from a discretionary bonus in the form of a fully vested stock option of up to 1 million shares a year, priced at Yahoo's closing trading price the day of the grant.
The actual amount of the bonus will be based annually on the performance of the company and be approved by the board.
As a retention incentive, the board granted Semel a stock option to buy 6 million shares of Yahoo's common stock at an exercise price of $31.59 per share, the closing price of the company's common stock on May 31, the date of the grant.
The stock option vests annually over a three-year period, in progressively higher increments of 25 per cent, 35 per cent and 40 per cent, as long as Semel remains with the company.
It can be exercised over seven years, subject to conditions. If, however, there is a change in control at Yahoo, Semel's bonus options for that year would vest instantly.
In 2005, Semel exercised options on 7 million shares, which after deducting the prices paid for the stock, netted him $173.6 million, according to previous regulatory filings.
"The compensation arrangements outlined in today's filing underscore the board's high level of confidence in key members of the executive management team and their proven ability to drive outstanding performance," a Yahoo spokeswoman said.
The board's compensation committee also approved four-year performance and retention plans for Daniel Rosensweig, the chief operating officer, and Susan Decker, chief financial officer, who will each receive an annual salary of $500,000 for 2006 through 2009.
Each will be eligible to receive an annual target cash bonus of $1 million for 2006 through 2009, based on meeting performance goals. Both also were granted an option to buy 2.1 million shares at $31.59, based on Wednesday's share price.