Our Market Share’s Getting Smaller. … And Terry’s Pay Package is Getting Laaaaarrrrrger.
by John Paczkowski
Posted on June 8, 2007 at 12:01 AM PT
Yahoo’s compensation committee certainly has an interesting formula for executive-salary calculations–one based on an inverse relationship between job performance and financial reward. How else to explain CEO Terry Semel’s pay package for 2006–$71 million, despite a 60% decline in Yahoo’s net income and 35% drop in stock price. $71 million. And for what? A year of slowing revenue growth, slumping shares and staff defections, capped by a “Peanut Butter Manifesto” that Semel (shown below), didn’t even write.
No wonder two independent proxy-advisory firms are urging Yahoo shareholders to vote against the re-election of the company directors responsible for Semel’s compensation. “It appears that CEO Semel is rewarded when times are good … and when times are bad,” said Institutional Shareholder Services.
Especially when times are bad. According to PROXY Governance, Semel’s pay package is 926% above the median paid to CEOs at peer companies. And if you think that’s outrageous, consider this: the $71 million Semel banked in 2006 is much reduced from the $230.6 million he earned in 2005. But Yahoo doesn’t see a problem with it. “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,” said Yahoo spokeswoman Helena Maus. “It is also worth noting that Terry does not receive any perks, pensions or other retirement benefits, severance benefits, or any other deferred compensation.” Right … because adding a country-club membership or a car allowance to that $71 million would be a little too crass, huh.
“He’s tremendously overpaid,” said compensation expert Graef Crystal. “If this was an IQ series (ranking), his first name would be Albert (Einstein). He’s off the map.”
