News

Yahoo's Semel Steps Down as Chairman

• By The Associated Press
• January 31, 2008

The Sunnyvale-based company said another director, Roy Bostock, will replace Semel as the nonexecutive chairman of its 10-member board.

Yahoo said Semel decided to give up his chairman's role several months ago but agreed to stay on to give the company time pick a successor.

"With the company moving forward under new leadership, I believe this is an appropriate time for me to step down from the board," Semel said in a statement.

Semel, 64, hasn't been involved in Yahoo's daily operations since company co-founder Jerry Yang replaced him as CEO in June, although he still occasionally appeared at high-tech gatherings.

Bostock, who has held various jobs in the advertising industry, faced a shareholder backlash last year for being part of a Yahoo committee that richly rewarded Semel while the company's stock plunged.

Yahoo gave Semel a compensation package valued at $71.7 million in 2006 -- a year in which the company's market value dropped by 35 percent, or about $20 billion. Semel ranked as the highest-paid CEO at the 386 publicly held companies covered in an Associated Press analysis of nation's top corporate paychecks in 2006.

Three major shareholder advisory firms had recommended opposing the re-election of Bostock to Yahoo's board last year. Nearly one-third of Yahoo shareholders voted against Bostock at the company's annual meeting, an unusually large show of dissent.

The resistance apparently didn't sway Yahoo's opinion of Bostock, who joined the company's board in 2003.

"Roy is an outstanding executive who has decades of experience in the advertising industry -- an area that is more important than ever to Yahoo's business and our long-term success," Yang said in a statement.

Semel's reign as CEO ended primarily because Yahoo hasn't been cashing in on the Internet advertising boom as effectively as its Silicon Valley rival, online search leader Google Inc.

Before Google went public in 2004, Yahoo reportedly considered buying its then-smaller foe for a few billion dollars, but Semel balked at paying that much. Google now boasts a market value of $175 billion -- seven times greater than Yahoo's.

As part of Yang's efforts to boost Yahoo's profit, the company said this week it would cut 1,000 jobs, paring Yahoo's 14,300-employee payroll by 7 percent. It's the biggest purge since Yahoo hired Semel in 2001 rescue the company from the ruins of the dot-com bust.

Semel, a former Hollywood movie studio executive, jettisoned about 650 jobs in his first year on the job. He then tried to turn Yahoo into an entertainment and information hub while also investing heavily in search technology in a bid to catch up with Google.

The strategy initially paid off, lifting Yahoo's profits and stock price. In the first 4 1/2 years, Yahoo's shares nearly quadrupled in value. But Yahoo's financial downturn during the past two years raised questions about Semel's grasp of the Internet advertising market, provoking a call for him to be fired.

Semel made a fortune during his tenure at Yahoo, having realized nearly $450 million in gains by exercising some of the stock options that the company gave him.