Although Yahoo! Inc. (NASDAQ: YHOO) is struggling to compete against the likes of Google Inc. (NASDAQ: GOOG) these days, don't tell Yahoo! Chairman Terry Semel. While the Yahoo! executive took home only $1 last year in salary, Terry's not sweating it. Instead of a monetary salary, the CEO was awarded stock options in 2006 to the tune of $80 million $71.66 million, or $39.8 million if you look through Yahoo!'s looking glass (er, proxy statement).

It's common practice to award CEOs a single dollar for salary (Google's two founders do this also), and stock options are used as an incentive and motivation to ensure the company's stock price rises to a level that provides a nice stream of income when those options are exercised by senior management.

Semel was only making $250,000 in annual salary before the pay cut to $1 took place in May of 2006, so his annual pay was already pretty low, all things considered. His stock options have been pretty large, however, making up for the lower salary. However, Semel's stock options from 2006 ended up not paying off as YHOO shares plunged more than 35% last year. Therein lies the risk in taking stock options as a form of compensation.

Semel's stock option count recently included 7.3 million from last year and another 800,000 as a bonus. By comparison, Google's leaders (Page, Brin and Schmidt) received smaller compensation packages even as their company doubled Yahoo!'s 2006 profit ($3 billion). The three were paid less than $598,000 combined, while taking annual $1 salaries and using most of the rest for personal security and transportation costs.

[updated 5-3-07, 12:24pm EDT]