SAN FRANCISCO - Yahoo Inc. Chairman Terry Semel
stepped down as chief executive in a surprise move Monday, ending his
increasingly ineffectual pursuit of online search leader Google Inc. ¡ª a losing
battle that had demoralized Yahoo's shareholders and employees.
Yahoo! co-founders Jerry Yang (C) and David Filo (R) pose
with chief executive Terry Semel in front of the NASDAQ MarketSite in
Times Square in New York after ringing the opening bell at NASDAQ in this
March 2, 2005 file photo. Following investor pressure for a management CEO
Semel is stepping aside and will be replaced as CEO by Yang, Yahoo said on
June 18, 2007. [Reuters]
The Sunnyvale-based company appointed co-founder Jerry Yang as its new CEO
and named Susan Decker as its president. Decker, who had been touted as Semel's
heir apparent, was recently promoted from Yahoo's chief financial officer to
oversee the company's advertising operations.
Semel, 64, will remain chairman in a non-executive role after spending the
past six years running the company.
"I saw myself as more of a coach than a player going forward," Semel told
analysts and media during a Monday conference call.
Signaling Semel's decision was voluntary, Yahoo said he will not receive a
severance package. The former movie studio executive already has made a fortune
since joining Yahoo in May 2001, having realized nearly $450 million in gains by
exercising some of the stock options that he received during his tenure.
Despite Yahoo's recent struggles, Semel received another big bundle of stock
options last year that boosted the value of his 2006 compensation package to
$71.7 million. That was more than any other CEO among 386 publicly held
companies covered in an Associated Press analysis of executive compensation
using new rules dictated by the Securities and Exchange Commission.
In Monday's conference call, an emotional Yang hailed Semel as "a role model
and mentor" and then sought to defuse recent speculation that Yahoo might be
sold to Microsoft Corp. or another suitor hoping to exploit the recent turmoil
at the company.
"I am totally excited and energized about assuming the leadership of this
great company," Yang said. "We have a long and prosperous future if we execute
Yang, 38, still owns a 4 percent stake in the company. Fellow co-founder
David Filo, who is helping to run Yahoo's technology group after the sudden
retirement of the department's leader earlier this month, owns a 6 percent
Monday's shake-up unfolded less than a week after Semel faced off with
shareholders disillusioned with a nearly 30 percent drop in Yahoo's stock price
during the past 18 months as its financial growth fell further behind Google's
Mountain View-based Google now makes more money in a single quarter than
Yahoo does in an entire year. The contrast represents a startling comedown for
Yahoo, which was the larger of the two companies when Google went public in
Since then, Google has steadily expanded upon the Internet's largest
advertising network to create nearly $140 billion in shareholder wealth as its
stock price increased by more than six-fold. Yahoo's stock, meanwhile, is worth
a little bit less than when Google went public.
Google's meteoric rise also has decimated the employee morale at Yahoo,
leading to a recent wave of executive departures that raised concerns about
whether the company would be able to retain the talent it needs to regain its
Just last week, Semel assured shareholders attending Yahoo's annual meeting
that he had the fortitude to lead a comeback. He has been counting on recent
improvements to Yahoo's online advertising system and a series of key
partnerships to boost profits after the company suffered an 11 percent drop in
its first-quarter earnings.
In Monday's conference call, Decker said the advertising upgrade, known as
Panama, is delivering results that so far have exceeded management's
Yahoo shares gained 81 cents finish at $28.12 Monday, then surged $1.14, or
4.1 percent, in the extended session.