Semel, just weeks shy of his three-year anniversary as Yahoo's chief, this week sold 1.5 million options priced between $54.88 and $55.65 a share, according to a filing with the Securities and Exchange Commission. The options cost Semel $19.5 million.
The sale comes soon afterand announced plans for a 2-for-1 stock split. Since then, the company's shares have surged to a 52-week high of $56.24, closing Wednesday at $54.69 a share. Shares of Yahoo traded for around $20 the day before Semel joined the company on May 1, 2001.
In addition to Semel, Yahoo's chief operating officer, Daniel Rosensweig, sold 83,000 options, netting him about $3.3 million. Chief Technology Officer Farzad Nazem pulled in about $2.7 million from selling 50,000 options.
A Yahoo representative said the sales were "a normal part of their portfolio diversification."
Executive stock option sales, for a long time an accepted norm, have come under fire over the past few years after the late-1990's stock bubble burst. Corporate scandals at Enron and WorldCom, where top officials made millions on options during periods of alleged mismanagement, have. Some companies, such as General Electric, are now using incentive-based performance units to reward their CEOs instead of stock options.
The rethinking about stock options also has spread to Yahoo. In early 2003, the company decided torewarded to employees to less than 2 percent of the company's outstanding shares, down from 5.6 percent when Semel joined in 2001. Instead, employees are granted a blend of options and cash bonuses.
In February 2003, in an interview with the Financial Times, Semel criticized stock options as "not a healthy way to reward people."
At the end of 2003,by Yahoo's board of directors, on top of a $150,000 raise. After this week's sale, Semel has 14.1 million vested and unvested shares remaining.
Yahoo's board also rewarded Rosensweig, Nazem and Chief Financial Officer Susan Decker with 45,000 shares of restricted stock and 125,000 options at $41.16 a share.
Those grants, however, came amid Yahoo's meteoric rebirth. Last quarter, the company reported a net profit of $101 million on $550 million in revenue, excluding traffic acquisition costs associated with its Overture Services subsidiary.
"You never like seeing execs selling stock, but it certainly seems understandable from a diversification standpoint," said Derek Brown, an analyst at Pacific Growth Equities. "The management team has done a phenomenal job since taking over, led by Mr. Semel himself."