The gossip is that the hedge fund managers with big money in Yahoo hate the way Yahoo CEO Carol Bartz is paid.
Carol gets a whole lot of Yahoo stock (1.6 million shares) if she can boost the company share price 150% from where it was when she joined the company a year and four months ago.
You’d think they’d love an incentive package like that, but there’s gossip that hedge fund managers actually hate it.
- They all got in Yahoo stock when it was in the $20+ range.
- They can’t sell YHOO without taking big losses. So YHOO is illiquid.
- One way hedge fund investors feel like they could get that elusive liquidity is for Yahoo to sell a piece of Alibaba, one of its Asian assets, and then issue a special dividend worth $1 billion to shareholders.
- The problem is, some analysts figure Yahoo’s Asian assets account for as much as half of its market cap. Any kind of major sale and divident would whack Yahoo’s stock price.
- Therefore, these hedgies don’t think it’s something Carol would ever do — because she has incentives to raise Yahoo’s share price.
We seriously doubt Carol would make a major strategic for the company due solely to her options stake.
But the gossip is that hedge fund managers might not feel the same way.
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