Semel’s Yahoo Pay Hinges on Stock Gains

Internet portal site Yahoo reported Friday the remaining details of the compensation package for its new chief executive, Terry Semel.

Semel’s salary will be $310,000 annually--identical to the sum received by former Yahoo CEO Tim Koogle, who was replaced by Semel on May 1.

Yahoo previously announced that Semel had received a grant of 10 million stock options, which gradually vest over the next four years. Those shares are priced from $17.62 to $75. So Yahoo’s stock--which fell 86 cents to $15.42 Friday on Nasdaq--would need to rise substantially before Semel could profit from his options.

Semel also purchased outright 1 million Yahoo shares just prior to taking charge, giving him an overall potential ownership stake of about 2% of the company.

The former co-chief executive of Warner Bros. was recruited last spring to build new alliances for Yahoo with traditional media titans. The company expects Semel to diversify its business and decrease reliance on the anemic advertising market that accounts for some 80% of its revenue.

Semel is thought to be worth hundreds of millions of dollars from prior business ventures. Still, compensation experts view his acceptance of a package weighted heavily toward Yahoo’s future stock performance as a vote of confidence in the troubled Web pioneer. Yahoo’s stock has lost 92% of its value since March of last year, as advertising revenue has plummeted.

Semel is bucking the current compensation trend for dot-com executives, said Edward Lawler, a professor at the USC Marshall School of Business and an author of a book about pay strategies in the “new economy.” Since the Internet stock bubble burst, top officers have been demanding more cash and stock up front, to compensate for lagging share prices.

“He’s putting it on the line with that package,” Lawler said. “He’s clearly saying ‘I believe in the company.’ ”