Yahoo Inc says chairman Terry Semel's annual salary will be reduced to US$1 through 2008 in exchange for millions of company stock options that will give its chief executive an opportunity to build upon the US$429 million windfall that he has reaped during the past three years.
The Sunnyvale, California-based company awarded Semel with 6 million stock options at an exercise price of US$31.59 -- the closing price on the NASDAQ Stock Market on Wednesday when Yahoo's board approved the grant. Yahoo disclosed the reward in a Securities and Exchange Commission filing late on Friday.
Semel, 63, also will be eligible to receive a bonus of up to 1 million stock options annually through 2008 as part of a renegotiated contract that lowered his annual salary from US$600,000 to US$1 annually during the next three years.
Google Inc, one of Yahoo's biggest rivals, also pays a US$1 salary to its CEO, Eric Schmidt, and co-founders Larry Page and Sergey Brin.
Like Semel, the Google trio has been making millions by selling company stock.
Yahoo described its compensation changes as a way to motivate and retain Semel, a former movie studio executive who lifted the Internet powerhouse out of the dot-com doldrums after taking over the helm five years ago.
Since Semel's arrival, Yahoo's stock price has tripled despite a recent slump in the shares. Semel has cashed in on the run-up by selling 18.1 million of his stock options for a gain of US$429 million during the past three years, according to SEC documents.
Semel still held another 17.7 million unexercised stock options before Yahoo replenished his supply this week.
Yahoo also gave another 5.43 million stock options with an exercise price of US$31.59 to four other top executives: Daniel Rosensweig, chief operating officer; Susan Decker, chief financial officer; Farzad Nazem, chief technical officer; and Michael Callahan, general counsel.
Most of those rewards went to Rosensweig and Decker, who each received 2.1 million stock options.
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