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Yahoo CTO Farzad Nazem Leaving Company

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Updated below to include Nazem’s explanation: Another major departure at Yahoo — and another gap. CTO Farzad Nazem is parting ways with the company effective immediately, according to an SEC filing this afternoon. The filing includes a copy of Nazem’s separation agreement, which spells out that his involvement in the company actually ends today even though his termination date is June 8.

Nazem joined the company in 1996 and became CTO in 1998. As part of the Yahoo reorganization that led to the departure of COO Dan Rosensweig, Nazem was appointed to head techonology, one of the three core units. Sue Decker, then CFO, was put in charge of the Advertiser & Publisher Group while the job at the top of the third group, Audience, has yet to be filled. Nazem recently reorganized the technology group; we posted his memo explaining the moves.

Just last week, Nazem exercised options for 84,500 shares of stock at $24.75 and then sold them for $29.75-$29-79 that day. Some of his remaining options will vest fully June 8 but the right to exercise his options following departure relies on his compliance including an agreement not to engage in “certain competitive activities” for three years — ie, no work in any way with Google or Microsoft — and his agreement not to solicit any Yahoo employees or contractors. (If he’s with a company acquired by Google or Microsoft or is consulting in an area that didn’t exist at Yahoo as of June, 8, different story.) He’ll get the remainder of his 2007 base pay in lieu of other severance.

— He also agrees not to disparage Yahoo for five years and Yahoo agrees that top execs, including his successor and the directors, will not disparage him.

Update: Nazem says he’s retiring. From his post on Yahoo’s blog, Yodel Anecdotal: “After spending the last 26 years in this fast-paced technology industry, I