Terry Semel Vs. His Shareholders

Terry Semel escaped Yahoo!'s annual shareholder meeting unscathed Tuesday. But shareholders made it clear that the chief executive has some work to do if he plans on sticking around another year.

More than a third of shareholders don't support the company's board, and they also want executives to feel pain tied to the company's poor performance, as compared with competitors like Google (nasdaq: GOOG - news - people ). Yahoo! (nasdaq: YHOO - news - people ) stock price hadn't budged beyond $30 since early May, and is down 9% over the past year.

At last year's meeting, the slate of directors was approved nearly unanimously. This year, three shareholder advisory groups recommended that stockholders oppose some of the nominated directors.

Semel, the primary target of the minority group's ire, took home compensation worth nearly $72 million in 2006. But he refused repeatedly during Tuesday's meeting to make any concessions to disgruntled investors.

As small-scale Yahoo! shareholders lined up in front of the microphone in Santa Clara, Calif., to hammer away at Semel with opinions and questions, Semel acted as though he was irritated to be speaking with such, well, yahoos.

"I think you're just trying to be cute," Semel said to stockholder Eric Jackson, who represented a group of 100 investors with a combined $2.1 million worth of stock in Yahoo!. Jackson had asked a question that Semel believed he already answered: How does Yahoo! plan to execute its strategy to compete with Google and grow its display Internet advertising business?

Semel barely rose to Jackson's bait when asked whether he still has the "fire in his belly" to continue as Yahoo!'s boss. "Absolutely," Semel said, and left it at that.

Another investor asked why Yahoo! chooses to offer cheaper search advertising prices than Google. Semel attempted to offer a remedial crash course in the search business model--in auction-based advertising the market sets keyword prices based on advertiser bids--but soon gave up.

The loud minority at the shareholder meeting succeeded in publicly airing its grievances it has with Semel, but an equally noisy activist group voiced its displeasure with Yahoo!'s policy on cooperating with the Chinese government. One shareholder accused the company of betraying Chinese journalist Shi Tao by giving the Chinese government access to his e-mail. Shi, who is in jail in China, joined a lawsuit on May 30 against Yahoo!.
Source : http://www.forbes.com/