Subpar Semel Slides Out With $500 Million

Ousted Yahoo! (YHOO) chief executive Terry Semel pocketed more than half a billion dollars before he was removed from office on Monday.

He made the money from shares and option gains over his six years at the helm. His personal profit works out at a stunning $282,000 a day.

Two hundred and eighty-two thousand dollars. Every day. Including Sunday.

How's your salary feel now?

If Yahoo! were willing to pay Semel that much for running the company not very well, imagine what he might have earned for doing a really good job!

Semel, who will remain "non-executive chairman" at the Internet giant while co-founder Jerry Yang takes the helm, was removed as CEO after a massive shareholder revolt at this month's annual meeting.

Shareholders finally lost patience with the 64-year old executive after Yahoo! spent years falling behind fresher upstarts like Google ( GOOG).

They were particularly incensed at Semel's hefty annual compensation. But no one we know has gone back through all the public filings and counted it all up.

Until now.

In total, while Semel was running Yahoo!, he quietly made $448 million by cashing out shares and options. After reviewing the public filings themselves, company officials confirmed the numbers.

It said Tuesday that he realized $25.4 million in 2003, $230 million in 2004, $173.6 million in 2005 and $19.0 million in 2006.

On top of that, Yahoo!'s latest proxy shows, Semel is left with shares and options worth another $80 million even at today's lackluster stock price.

Total: $528 million.

Yahoo! valiantly sought to defend the extraordinary sum. "Under Terry Semel's leadership, Yahoo! staked out a strong competitive position as an Internet leader," the company said in a statement. "During his tenure Terry helped Yahoo! increase its revenues nearly nine-fold from $717 million in 2001 to $6.4 billion in 2006; boost operating income from a loss in 2001 to nearly $1 billion last year; and create more than $30 billion in shareholder value."

To watch Alix Steel's video take of this column, click here .

The company added, "He helped grow Yahoo!'s audience from 170 million to more than 500 million users globally, and oversaw the expansion of our base of talented employees from 3,500 to nearly 12,000."

OK. He did a job.

But the question isn't why Terry Semel got paid a salary. Even a decent one.It's what he did to merit earning what amounts to $282,000 every day for six years.This is, after all, the guy who decided back in 2002 that Google wasn't worth more than $3 billion.

Oops.

Semel was brought in during the dot-com collapse in 2001 to rescue Yahoo! from financial crisis. He succeeded. How? Among his radical steps: Tightening belts, laying off staff ... and actually starting to charge some customers for the company's services.

These, of course, helped the company's bottom line. So, too, did the eventual recovery in the worldwide economy and the tech industry, which has now gone from depression to boom.

Throw in the rally on the Nasdaq, and over the next few years you got quite a bounce in the share price.

I must have missed the moment when half a billion dollars became the new normal. I call it a "Raymond" after the former Exxon boss, Lee Raymond, who walked away with that much loot.

These days a CEO isn't anyone unless he's made a Raymond.

Middle class earnings in America, on the other hand, have pretty much gone nowhere in the last thirty-five years.

Here's the kicker. Maybe paying Semel this much wasn't merely a waste of shareholders' money. Maybe it was counterproductive.

A 64-year old man with $448 million cash in his pocket already has more than he could ever possibly spend. What economic incentive does he really have left? Just how hungry can a really well-fed fat cat be?

The Google boys are young, hungry and have skin in the game. A lot of it.

So, too, does Jerry Yang. The co-founder and "Chief Yahoo!" takes the helm age just 38. Whether he can restore the company's luster remains to be seen. But through the IPO and the bubble he kept $1.5 billion worth of stock and every $1 movement in the share price is worth $54 million to him personally.

In keeping with TSC's editorial policy, Brett Arends doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Arends takes a critical look inside mutual funds and the personal finance industry in a twice-weekly column that ranges from investment advice for the general reader to the industry's latest scoop. Prior to joining TheStreet.com in 2006, he worked for more than two years at the Boston Herald, where he revived the paper's well-known 'On State Street' finance column and was part of a team that won two SABEW awards in 2005. He had previously written for the Daily Telegraph and Daily Mail newspapers in London, the magazine Private Eye, and for Global Agenda, the official magazine of the World Economic Summit in Davos, Switzerland. Arends has also written a book on sports 'futures' betting.

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