Yahoo CEO wards off criticism, eyes growth

NEW YORK (CNNMoney.com) -- Yahoo CEO Terry Semel fended off criticism at the company's annual shareholder meeting Tuesday, saying he was upbeat about the company's growth prospects.

While the tone of the meeting was relatively peaceful, investors quizzed Semel and other key Yahoo executives on hot-button issues including the company's sluggish stock performance, its rival and leading search engine Google Inc. (Charts, Fortune 500) and the company's strategy going forward.

Semel, who has been criticized earlier this year for Yahoo's stock performance, said that the company was very focused on growing its business in an industry that still has plenty of room for growth.

"I think Yahoo has more opportunities than perhaps any other time in its history," said Semel.

One shareholder, during a question and answer session, said he was surprised that Semel did not apologize to investors for Yahoo's weak stock performance.

"I feel very good about my capabilities and about the company's ability to grow," Semel responded.

Over the past year, shares of the Sunnyvale, Calif.-based Web search company stock have fallen over 8 percent. Yahoo (Charts, Fortune 500) stock edged lower in afternoon trading on Nasdaq.

Yahoo announced a management shake up last December in an effort to revitalize the company. Since then several executives have left, including most recently, Farzad Nazem, the company's former chief technology officer, who said he would step down earlier this month.

Besides posting disappointing first-quarter earnings, Yahoo's new search technology Panama, intended to help narrow the gap with rival Google, has not delivered results as quickly as some on Wall Street had hoped.

Semel said that advertising remains Yahoo's core business, although it is focusing on diversification with a greater reliance on Internet searches.

While not giving any specifics, Semel said during the meeting that Yahoo was open to both acquisitions and partnerships.

"I think there are many opportunities out there," said Semel.

Last month Microsoft (Charts, Fortune 500), the world's largest software company, was reportedly in preliminary talks to buy Yahoo, which could create an Internet advertising powerhouse that would rival Google.

Earlier in the meeting Yahoo shareholders rejected a proposal to tie the compensation of senior executives to company performance. Sixty-two percent of the shares voted against it. The shareholder proposal would have based the annual bonuses and options of senior executives on Yahoo's stock performance and relative performance versus competitors such as Google Inc. (down $6.57 to $504.77, Charts, Fortune 500)

The board opposed the change saying in its proxy statement filed in April that basing compensation on performance relative to its peers, while important, does not take into account other considerations.

Last year Yahoo CEO Terry Semel's pay package totaled nearly $108 million, including 6.8 million in stock options, according to shareholder advisory group Institutional Shareholder Services, cited in a New York Times report Tuesday. The company said Semel's pay last year was worth $39.8 million, according to the company's recent proxy statement.

Two other shareholder proposals concerning Yahoo's human rights policies in China were overwhelmingly rejected.

Investors approved changes to the company's employee stock purchase plan and voted in favor of having PriceWaterhouseCoopers serve as the company's independent public accounting firm.