For Yahoo! ( YHOO) CEO Terry Semel, the wait was worth it.

The executive didn't get a bonus for 2003, even after Yahoo! stock more than doubled. But Semel won't exactly go wanting, either.

Semel waited until last month to receive 2.9 million stock options based on his performance last year, according to the proxy statement Yahoo! filed Friday and revised Monday. Because 900,000 of those options vested immediately, the recent run-up in Yahoo!'s stock gives the Yahoo! chief a $12 million paper profit on that options grant -- a nice addition to Semel's base salary of $600,000.

Meanwhile, three other top executives at the Internet bellwether enjoyed generous raises in 2003, in a further demonstration of how Yahoo!'s financial performance and surging stock price have translated into executive compensation in Internet time.

Semel's options grant also spotlights the significant impact that expensing options will have on Yahoo!'s bottom line, should the Financial Accounting Standards Board get its way in mandating how companies treat stock options grants.

Yahoo!'s shares, which leaped 16% Thursday following the release of shockingly strong first-quarter results, dropped $1.03 Monday to $55.18. The stock has more than tripled over where it was trading in January 2003.

Redefining the Landscape

Clearly, options are a large part of the compensation package for Semel, a Hollywood veteran who took the helm at Yahoo! three years ago. In 2003, Semel realized $25.4 million by exercising 1 million stock options.

In granting Semel's new options last month, Yahoo!'s compensation committee said it took into account such 2003 achievements as Yahoo!'s "redefinition" of its search business, the strengthening of its core businesses, completed deals such as the acquisition of pay-per-click search engine marketer Overture Services, and Yahoo!'s "enhanced financial performance."

The $600,000 cash portion of Semel's 2003 compensation, however, represents a decline from his year-earlier salary-and-bonus package of $1.3 million. In Monday's revised proxy statement, which the company said it issued to correct clerical errors in the board compensation committee's report, Yahoo! said Semel's base salary wouldn't change from 2003 to 2004.

Semel wasn't the only top executive to have a nice set of paydays last year. Chief Financial Officer Sue Decker, Chief Operating Officer Dan Rosensweig and Chief Technical Officer Farzad Nazem each received 45,000 shares of restricted common stock -- 35,000 shares of which vest in three years, and the balance of which are linked to certain unspecified performance-based objectives. Fully vested, those shares were worth $1.9 million to each executive when they were granted, and are worth $2.5 million at Monday's prices.

Paying Off
Yahoo!'s long rise

Decker, Rosensweig and Nazem each also received 125,000 stock options. Those are worth $3.2 million to $8.2 million to each recipient, depending on whether one believes that Yahoo!'s stock will appreciate 5% or 10% annually over the 10-year term of the options.

The three executives all received salary and bonus raises as well. Decker's salary and bonus, for example, went from $944,000 in 2002 to $1.2 million in 2003.

Big Numbers

Among executive officers whose compensation was itemized in the proxy, Nazem distinguished himself by exercising the most options in 2003, netting $48 million. (As with Semel's exercises, that number represents the difference between the option's strike price and Yahoo!'s share price when options were exercised, and doesn't indicate whether or not Nazem sold any shares.) Semel held $199 million worth of exercisable, in-the-money stock options at 2003's close, according to the proxy, while Nazem held $102 million worth.

Critics of lavish executive pay have taken aim at stock options in recent years, saying big option grants motivate executives to focus on pushing the stock up now at the expense of the long term. Whether or not that has been the case with Yahoo!, the move to expense stock options would have had a major effect on the company's net income in recent years, judging from Yahoo!'s 2003 annual report.

Had Yahoo! used what is known as the fair value method, the company's reported 2003 net income of $237.9 million, or 37 cents per share, would have been reported as $34.8 million, or 5 cents per share, fully diluted. Yahoo!'s 2002 net income of $42.8 million, or 7 cents per share, would have been converted into a $440.1 million loss, or a loss of 74 cents per share.