An unseemly Semel
By Tom Tapp
"Yahoo is really off to a good start in 2006," said Chief Executive Terry Semel in a call with analysts.
One can see where some of Semel's enthusiasm comes from, given 2005 was a very good year for Terry Semel himself. Accoring to the Wall Street Journal, he optioned 7 million shares of Yahoo stock worth $173 million.
That extraordinary story was followed today by the announcement Yahoo's profit had fallen in Q1 of this year 22%, or roughly $60 million. The Journal and other outfits chalked the drop up to an "accounting change." That accounting change turns out to govern the rules for "stock-based compensation."
Why then did no one, including Semel, see that his decision to exercise his $176 million in shares was, in the very least, ill-timed for Yahoo itself? What's more, total exec compensation from shares excercised last year was $300 million.
This is not to say that Semel and his execs have not done good things for Yahoo. The company's revenue did rise during Q1 34% to $1.57 billion. It's just to say that they might easily have done much better. Semel, for instance, could have only exercised $100 million in options. It's a great sacrifice, I know, but it would have righted his company's balance sheet.
Related Links
Yahoo's Net Declines 22% After Accounting ChangeYahoo's Executives Exercise Options
