Coming off Yahoo Inc.’s toughest year since the dot-com bust, Chairman Terry Semel remained upbeat Tuesday as he faced shareholders who have watched their investments shrivel while rival Google Inc. sprinted further ahead in the online advertising race.

”Yahoo has staked out a strong competitive position and … we are better positioned than we have ever been before,” Semel said during Yahoo’s annual meeting.

The gathering gave shareholders a chance to air their frustration with an 18 percent drop in the company’s stock price since last year’s meeting. The downturn has wiped out about $10 billion in shareholder wealth.

Meanwhile, Google shares have surged by 32 percent during the same period, giving it a market value of nearly $160 billion – more than four times greater than Yahoo, which was the larger of the two Internet icons when Google went public in August 2004.

Yahoo shares fell 30 cents to $27.05 Tuesday while Google shares dropped $6.57 to finish at $504.77.

Only one shareholder, Naples, Fla., money manager Eric Jackson, chastised Semel for Yahoo’s inability to keep pace with Google during Tuesday’s two-hour meeting.

”I am surprised you did not apologize to Yahoo shareholders for the last three years of performance,” Jackson told Semel after the executive’s prepared remarks.

Jackson, who said he was representing about 100 stockholders who collectively own about 2.1 million Yahoo shares, concluded his comments by asking Semel if he still had enough ”fire in his belly” to run the Sunnyvale-based company.

Semel’s response: ”Absolutely.”

Although few of the roughly 150 shareholders at Tuesday’s meeting stepped up to the microphone to question Semel, some used their ballots to express their discontent with the company’s board of directors.

Based on a preliminary count, one-third of the voting shareholders opposed the re-election of at least one Yahoo director. It’s rare for corporate directors to be opposed by more than 10 percent of the vote in uncontested elections like Yahoo’s.

Company officials declined to provide specific breakdowns on how shareholders voted for each of Yahoo’s 10 directors, including Semel. The individual results will be disclosed when Yahoo files its second-quarter report with the Securities and Exchange Commission, company spokeswoman Helena Maus said.

Three major shareholder advisory firms had recommended opposing the re-election of Roy Bostock, Ron Burkle and Arthur Kern, the directors on Yahoo’s compensation committee.

The firms concluded the trio should be punished for richly rewarding Semel even as shareholders suffered. In 2006, Semel received a compensation package valued at $71.7 million – more than any other chief executive at the 386 publicly held companies covered in an Associated Press analysis of nation’s top corporate paychecks.

Semel’s compensation package wasn’t brought up Tuesday. A shareholder proposal to link Yahoo executives’ pay to how well the company fared against its industry peers was rejected by about two-thirds of the voters.

Yahoo co-founder Jerry Yang, who also is a company director, provided Semel with a vote of confidence toward the end of the meeting when he reassured Jackson that the company is headed in the right direction despite Wall Street’s doubts.

”These are pretty exciting times for Yahoo,” Yang said. ”I think the internal perception of what we can achieve as a team is different from the external perception. We want to prove it.”

After six years as Yahoo’s CEO, Semel’s fate appears to be riding on recent improvements to the company’s system for delivering text-based ads alongside search results and the Web content of its partners.

For the past few years, Google has done a better job picking out ads that induce revenue-generating clicks – one of the biggest reasons why it now makes more money in a single quarter than Yahoo does in an entire year.

But Yahoo’s upgrade, known as Panama, is supposed to close the gap. Echoing remarks he has made previously, Semel told shareholders Tuesday that some of Panama’s financial benefits will become evident when Yahoo releases its second-quarter results next month. But the biggest gains probably won’t kick in until the final half of the year, Semel said.

”You have every reason to believe this is going to be a much better business for Yahoo going forward,” Semel said.