Yahoo's former CEO Terry Semel is one of the best examples of a working model for executive compensation. Upon moving from CEO to a non-executive chairman position, he will be foreiting 4.5 of the 6 million in stock options he received in May of 2006 while also forfeiting any severance pay. The company's stock was doing perfectly fine up until last year when Yahoo's numbers began to suffer - then some questioned Terry's paycheck. However, many failed to realize that while he did receive stock options during this time, they were options with a high strike price of $31.59 a share which gives it a present value of just $63 million with a clause that he would not receive future stock options for three years. And with a $1 salary and an all-option bonus, this meant that the $63 million over three years became only $22 million assuming he continued to perform well. This is how executive compensation should work - executives should have a large stake in the company and have that stake tied directly to performance. Let's hope more companies catch on and follow this same trend.