Here's The Point-By-Point Takedown Of AOL Management Everyone Is Talking About

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Photo: U.S. Army / Sgt. Michael J. MacLeod

Starboard Value, a fund that owns 5.3% of AOL, wants other shareholders to vote out several board members at the company’s upcoming June annual meeting.To make the case, it has released a brutal, point-by-point takedown of AOL management.

The document is highly critical and its getting coverage all over: At Forbes, AllThingsD, and Romenesko.

Here's AOL's response

AOL HAS THE RIGHT TEAM AND STRATEGY IN PLACE TO FURTHER
ENHANCE STOCKHOLDER VALUE

  • AOL has made significant operational and financial progress since spinning off from Time Warner only two and a half years ago.
  • AOL has a clear, concise, and publicly communicated growth plan and is on track to meet its strategic goals.
  • AOL's stock is a top performing stock in our industry year-over-year and year-to-date.
  • AOL stock is up 166% since its low as a direct result of the action taken by AOL's management and Board.
  • AOL's Board nominees are diverse and have significant operational, financial and public board experience in AOL's areas of strategic focus.
  • All of AOL's senior management and directors own stock in the Company and AOL's Chairman and CEO is the single largest individual investor in the Company.
  • Starboard's slate does not have a long-term strategy or relevant industry experience.

AOL'S CLEAR STRATEGY IS DELIVERING IMPROVED RESULTS

  • The Board has unlocked over $1.7 billion in value in the last two years.
  • AOL has returned capital to stockholders by buying back 14% of outstanding shares, and has committed to return all of the proceeds of the almost $1.1 billion patent sale to stockholders.
  • AOL has reported three consecutive quarters of better than expected earnings results, which demonstrate that the Board's strategy is working.
  • The Board has presided over significant improvement of AOL's operations and financial results, including reducing annual costs by approximately $500 million prior to investment in areas of strategic focus, reducing headcount by 37%, ending unfavorable distribution deals and exiting unprofitable markets.

STARBOARD DOES NOT HAVE A LONG-TERM STRATEGY
AND THEIR NOMINEES DO NOT HAVE THE RIGHT EXPERIENCE

  • Rather than present a reasoned strategy for driving stockholder value, Starboard has simply criticised AOL's long-term strategy and investments in content-based assets, and we believe their goal is to break-up and liquidate the company.
  • AOL's Board of Directors is diverse and highly qualified. The AOL Board has significant operational, financial and public board experience.
  • On the contrary, we believe Starboard's nominees would negatively impact the Board's level of industry expertise, public company experience and diversity.
  • AOL is actively engaged in seeking two new Board members, but believes Starboard's slate will damage the Company and its relationship with advertisers.
  • Notwithstanding the negative impact of Starboard's last four public statements with respect to AOL's strategy, AOL's stock hit a 52-week high this week, based on AOL's operating execution, strategic momentum, and continuing to unlock stockholder value.

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