What a week for Yahoo. First, chairman Roy Bostock fired CEO Carol Bartz – over the phone. In tech circles, although the timing seemed off, two months after Bostock proclaimed that he was behind Bartz – it wasn’t unexpected. Yahoo has languished for years.
In most companies, that would have been the end of the strife. But Yahoo isn’t like most companies, and its ups and downs – and more downs and more downs – have put it into an unusual position. The board continues to be under an attack that may move beyond the verbal and into proxy fights.
From a strict stats point of view, Yahoo seemed to have a lot going for it, according to governance research firm GMI. That includes a mix of tenures among directors, creating old, medium, and new groups. Until Bartz was forced out, there were three women serving as directors. Even Bartz’s recruitment and severance packages were ‘hard-nosed,’ so she won’t necessarily walk away with a fortune. At least by CEO standards.
However, Yahoo’s board has been seen as largely ineffective, making the wrong choices at critical times and being too slow in what it did. For example, long-term shareholders will remember that the board wouldn’t sell the company to Microsoft for $44.6 bn, or $31 a share, which was a 62 per cent premium at the time.
Instead, the board was sure it should get more, so just said no. The result was a number of individuals and organisations that lost a lot of value.
This is the board that hired Bartz. And some argue that firing her before the holiday season, and before someone else was in place, was foolish.
So, no, the directors won’t get to quietly walk away and try something else. Daniel Loeb, CEO of investment firm Third Point, which has accumulated 5.1 per cent of the stock, wants Bostock and three other directors to go too.
Reportedly, even Jerry Yang, a Yahoo co-founder and long-time board member, wants to take the company private. Although considering that he was CEO when the company refused the Microsoft offer, you might ask exactly what he would do that he couldn’t have done before.
A former Yahoo senior executive suggested what a new board should look like, including individuals who were experts in finance, consumer internet markets, advertising, corporate governance, management and turnaround, and people who grasp how disruptive technologies work on the internet. In other words, the sort of people investors might have hoped would have already been on the board.
[Article by Erik Sherman, Inside Investor Relations]
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