Taking a look at Yahoo CEO Terry Semel's stock exercises

-Shomari Hines Perhaps this is something we should have thrown on over to our friends at Dealbreaker.com but being that it has to do with a company we cover, we decided to take a crack at it. Over the weekend we got a very interesting tip about Yahoo CEO Terry Semel and his options. Well we wont really call this a tip being that the info we’re about to share is available to the public or most of it anyway. But what’s interesting about this is that, it has stayed under the radar while other tech/internet CEO’s were in the spotlight about their stock options and practices. Well this weekend thanks to an email from a man we will call Johnny, who is a former options market maker on the Chicago Board Options Exchange and the Pacific Options Exchange for over ten years maybe Semel deserves his share of the spotlight. Below is what “Johnny” had to share with us after the click. CONTINUED... I am a former options market maker on the Chicago Board Options Exchange and the Pacific Options Exchange for over ten years, having traded and held the largest positions personally as anyone who ever walked on those trading floors. So with that in mind, here are the specifics. On April 16, 2001 there was an agreement made between Terry Semel and Yahoo where by he was granted options to buy a total of 10,000,000 shares of Yahoo at various prices. That agreement says that the 5,000,000 options is to be bought at Fair market value(as defined in the plan) on the date of the grant.The Fair Value of those 10,000,000 options if they were indeed granted on April 16, 2001 with the stock at 17.62 would have been over$110,000,000.00. If those options were granted on May 1, 2001 when the stock was trading at 22, the options were worth perhaps $135,000,000.00.If the Ageement was indeed dated April 16, why did it not just specify the exercise price of $17.62 for the 5 million shares. Why did it leave that price open.Semel did not begin as CEO and Chairman untill May 1, 2001, when the stock was 22. Although, I have no hard evidence that the shares were back dated, April 16 was at the trough with 20 days on each side.What is most significant is that the 10 million grant was the largest in history in terms of total value as calculated by the SEC and FASB, even if it was not back dated. The most glaring abuse is the grant of 2,900,000 (pre split) options on March 10, 2004 at the strike price of $41.70 ( 5 cents above the lowest closing price of the year and prior to the biggest 30 day advance of the stock in 6 years since. He sold 2 million shares at 55.25 pre-split prices on April 12, 2004 and another 1,500,000 (pre- split shares at 60 in July 2004) after an announced 2/1 split on April 7, 2001 together with great earnings.I am certain that this grant at $41.70 was backdated and spring loaded. He has been granted more options and exercised many of the options and sold the stock.Since he became CEO on May 1, 2001, the stock has gone up 185% 11-30. Many other stocks have advanced much more than that, but no CEO received more options grants or exercised and sold more stock.