The annual bonus will be determined by the board's compensation committee based on the company and Bartz's performance. She will also receive stock options for 5,000,000 Yahoo shares, it said.

Bartz's appointment, confirmed on Tuesday, is seen paving the way for the Internet company to make decisions on big issues, including a sale or search deal with Microsoft Corp.

Under previous CEO and co-founder Jerry Yang, Yahoo rejected a $47.5 billion buyout offer from Microsoft nearly a year ago.

Yahoo's shares fell 80 cents, or 6.45 percent, to close at $11.61 on Thursday.

(Reporting by Ritsuko Ando; Editing by Andre Grenon)