Despite Yahoo's down year, Semel gets a big bonus

Yahoo's stock plunged 35% in 2006, but CEO Terry Semel is being awarded with a bonus of options for 800,000 shares of stock.

By Paul R. La Monica, editor at large

NEW YORK ( -- Terry Semel, the chairman and chief executive officer of Internet media firm Yahoo!, will receive an annual bonus of options for 800,000 shares, the company said in a regulatory filing late Friday.

Yahoo (Charts) announced last year that Semel would receive an annual salary of just $1 a year for 2006 through 2008 and the right to receive up to 1 million stock options as a bonus.

Yahoo! chairman and CEO Terry Semel is receiving a hefty bonus for 2006 despite a tough year for the company.

The move to cut Semel's salary came after several other high profile tech executives, including the chief executive officer and co-founders of Google (Charts), as well as Apple's (Charts) CEO Steve Jobs, also agreed to $1 annual salaries.

Yahoo said that Semel's stock options have an exercise price of $32.12 a share, which was the closing price of Yahoo's stock on February 26, the date the grant was awarded.

Yahoo's stock took a tumble this week, along with the rest of the market. Shares closed on Friday at $30.42. So these options are currently underwater, meaning that Semel would lose money if he exercised them now.

Semel received a bonus despite the fact that Yahoo had a rough year on Wall Street in 2006.

Shares of the second largest online search company plunged nearly 35 percent last year due to concerns that the company had fallen far behind Google in Internet search, and was also facing steep competition from social networking firms like News Corp.'s (Charts) MySpace and privately held Facebook.

But Yahoo has bounced back sharply so far this year, rising 19 percent on hopes that the company's new search technology, Project Panama, will lead to market share gains as well as higher revenues and profits for the company.