Why Did Terry Semel Get $107.5 Million?

    June 14, 2007

Douglas McIntyre reports that two consulting firms have analyzed Yahoo CEO Terry Semel’s compensation package and determined that Yahoo shareholders should consider revolting.

Yahoo’s pay compensation committee has been showering Semel with money, giving him at least anywhere from $1.08 billion to over $800 million in stock grants over the last six years. Last year, $107.5 million in stock grants was given to Semel in lieu of a $1 salary, a year in which Yahoo stock dropped about 35%. That means he was paid $107.5 million for erasing over $15 billion in shareholder value!

Why is he getting so much money? Google’s founders don’t receive any extra stock, and they are paid $1, so they are working purely to make the company more valuable. Meanwhile, Yahoo’s boss doesn’t have any incentive to make the company more valuable, because he gets paid $100 million a year no matter how bad a job he does. Why does he still have a job? Wouldn’t Yahoo gain so much with a lower-paid CEO that the firing of Semel alone would improve their earnings?

UPDATE: Yahoo shareholders voted significantly against the current slate of directors at the annual meeting, but not enough to get them removed. Hopefully it will send a message that enormous compensation without results is not acceptable.