Terry Semel ended his six-year run as Yahoo's chief executive officer on Monday, and the company's co-founder Jerry Yang will take over from him, the company said.
Semel has been the focus of intense criticism in the past two years due to Yahoo's inability to capitalize as much as expected on the fast-growing market for search engine advertising. By contrast, Google has enjoyed eye-popping revenue growth and enviable profits almost exclusively from the search advertising market.
Last week, at Yahoo's annual shareholder meeting, Semel fielded stinging criticism from shareholders in attendance, leading to tense exchanges at times.
Semel resigned from his position as CEO and Chairman and will become the role of non-executive Chairman and serve as advisor to the management team.
Semel became chairman and CEO in May 2001.
The board of directors appointed Yang, who co-founded the company 12 years ago, as CEO, and Susan Decker, former executive vice president and head of Advertiser and Publisher Group, as the company's president.
In a webcast, Semel said he had told the board that he wanted to step back from his executive role "sooner rather than later" and that he and the board agreed this would be a good time for him to step down as CEO.
"I've long been talking to the board about the importance of ensuring a smooth succession to Yahoo's senior leadership," Semel said.
Semel expressed full confidence that Yang and Decker are the right people to carry Yahoo "through its multiyear transformation" while acknowledging that the past year has been a difficult one for Yahoo and that no one in Yahoo's management has been satisfied with the company's performance.