Semel officially joined Yahoo on May 1, replacing outgoing CEO and Chairman Tim Koogle. As part of his package for joining, Semel will receive an option to purchase 10 million shares of the company's 566.9 million outstanding shares--about 1.9 percent of Yahoo, according to a company representative.
The options are divided into four blocks with different purchase prices and vesting schedules with the last coming due within four years, according to a recent filing with the Securities and Exchange Commission. The largest block consists of 5 million shares priced at $17.62, the closing price of Yahoo stock April 16. Those shares vest over 3 years, with half exercisable a year after that date and the remainder coming due monthly over the next two years.
In addition, Semel will receive 2.5 million options priced at $30; 1.5 million priced at $60; and 1 million shares priced at $75. These blocks vest monthly in sequence, with the first coming due April 16, 2003, and the last in March 2005.
Yahoo surprised Wall Street in April when it appointed Semel, former co-CEO at Warner Bros., to lead the company. Yahoo has come under tremendous pressure to plug revenue leaks at the Sunnyvale, Calif.-based company. The Web portal has suffered from the overall pullback of spending in online advertising stemming from the closure of many Web start-ups and the slowness of traditional advertisers to fill its void.
As part of the announcement of his appointment, Semel agreed to purchase 1 million shares of the company's stock out of his own pocket.
Besides trying to turn around Yahoo's advertising woes, Semel plans to pursue growth in "premium services," which are areas on the site that the company can charge people to use.
Wall Street has had a mixed response to Semel's appointment. Financial analysts have found his background in entertainment and his industry contacts to be a positive factor. But many analysts have highlighted Semel's limited experience in selling advertising, which remains Yahoo's main source of revenue.
Further details of Semel's employment package will be disclosed in August in filings to the federal government, according to the Yahoo representative.