Yahoo’s Desire to Keep CEO Reflected in Pay
It was a very good Friday for Terry Semel -- but only if Yahoo Inc. stock rises.
Sunnyvale, Calif.-based Yahoo disclosed that its chief executive took home $600,000 in salary in 2005. Semel also received $8.7 million worth of restricted stock, as well as stock options that Yahoo said could be worth more than $100 million if the Internet giant performs well.
The former studio chief also pocketed $173.6 million by cashing out options granted in previous years, regulatory filings said.
The package attempts to balance performance-based pay with a desire to retain Semel, who turned Yahoo around after joining in 2001, compensation experts said. Semel’s base salary hasn’t budged. Last year, he received more than twice as many options but no restricted stock.
“The board seems to be concerned about someone poaching him,” said Bill Coleman, senior vice president of Salary.com Inc.
Yahoo granted Semel 250,000 restricted shares. But the stock doesn’t vest for three years. If he leaves before then, Semel gets nothing. Yahoo’s board of directors also gave Semel 2 million stock options. He got an additional 1.3 million stock options in lieu of a bonus.
But, in an unusual move praised by compensation experts, the company priced the 1.3 million options at a 33% premium -- they’re worthless unless Yahoo’s stock rises dramatically.
“If I’m a shareholder, I think that’s not a bad message to be sending,” compensation consultant Tim Sparks said. “The rising tide doesn’t lift his boat unless the tide rises by 33%.”
Yahoo shareholders had a lackluster 2005. Shares gained only $1.50, or 4%, during the year, ending 2005 at $39.18. The stock closed Thursday at $31.13, down 21% for the year.
In old media, CBS Corp. Chief Executive Leslie Moonves pocketed $5.3 million in salary in 2005 and a $13-million bonus. His counterpart at Viacom Inc., Tom Freston, received the same bonus and salary. Sumner Redstone, chairman of both companies, earned $24.5 million, with CBS and Viacom splitting his $14.25-million bonus.
