There were clearly problems over at Yahoo as more than one third of shareholders voted against the re-election of one or more directors, reflecting views of excessive executive compensation and poor performance under CEO Terry Semel. While all the incumbant directors were re-elected, the move was one of the largest no-votes of the year and sent a clear message to management. Interestingly, shareholders also rejected by 2-1 a proposal that would have allowed them to have a non-binding vote on executive compensation.

Yahoo's executive compensation problems stemmed from Terry Semel's large bonus and retention pay amounting to 6.8 million stock options while the company's shares dropped 35%. The CEO's $107.5 million paycheck in 2006 also made him one of the highest paid executives of the year. Many other executives at the company also received what many called excess compensation. In the end, shareholders are hoping that the vote at this annual meeting sent a clear message to management to either improve the company's performance or reduce their pay.