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Terry Semel has stepped down as the chief executive of internet search engine Yahoo! after failing to keep pace with rival Google.

Mr Semel has served at the head of the global success story since May 2001 but has come under increasing pressure for commanding a salary of $1.7 billion (£0.85 billion) while Yahoo! share values plummeted.

And it has today been confirmed that Mr Semel will relinquish the reins at Yahoo!, becoming a non-executive chairman instead.

In his place, co-founder Jerry Yang has been named the company's chief executive officer, while former chief financial officer Sue Decker takes over as president.

In a letter to fellow Yahoo! board members to confirm his change of role, Mr Semel said the new Yang-Decker partnership would be an "unbeatable team".

"No promotion could be more well-deserved," Mr Semel wrote.

"Jerry and Sue have been great partners to me, and I am excited to have the opportunity to continue working with the management team and the rest of the board in my new role as non-executive chairman.

"I am a huge believer in Yahoo! and its people. We have a unique array of audience, advertising and technology assets that will become even more valuable as the internet continues its rapid growth. And, I have no doubt that, with its new leadership team, Yahoo! will realise its enormous potential."

Speaking on behalf of the board, director Ed Kozel thanked Mr Semel for the "vital role [he] has played in making Yahoo! the internet leader it is today".

"All of us on the board and throughout the company thank Terry for his many contributions over the years and for his willingness to stay on to assist Jerry, Sue and the board as we drive Yahoo! forward," Mr Kozel said.

On taking his new role, Mr Yang said he and Ms Decker "look forward to working with [Mr Semel] to build on our firm foundation for future success and improved financial performance".

"I am very excited to be leading our exceptional team of 12,000 Yahoo!'s around the world," Mr Yang added.

"It's an honour and a great responsibility, and I look forward to the challenge. My immediate and overarching priorities are to realise Yahoo!'s strategic vision by accelerating execution, further strengthening our leadership team and fostering an even stronger culture of winning."