Jul 24, 2008 12:13 pm US/Pacific
Advisory Firm Endorses Yahoo Board Re-Election
SAN FRANCISCO (AP) ―
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Yahoo! headquarters in Sunnyvale, California.
AP
An influential shareholder advisory firm endorsed the re-election of Yahoo Inc.'s entire board Thursday, reducing the chances that the Internet company's directors will be ousted for spurning Microsoft Corp.'s $47.5 billion takeover bid during the spring.
Although the board's response to the now-abandoned offer was "concerning," RiskMetrics ISS concluded that a recent truce with activist investor Carl Icahn should be enough to protect shareholder interests during the next year.
Another shareholder advisory firm, Glass Lewis & Co., has recommended votes against three Yahoo directors—Chairman Roy Bostock, Ron Burkle and Arthur Kern. The same three were opposed by more than 30 percent of Yahoo shareholders in last year's election.
Glass Lewis targeted the three men this time because they sat on a compensation committee that signed off on an expensive employee severance program shortly after Microsoft made its takeover bid.
Because the severance packages could have triggered hefty payments to Yahoo's employees, the program threatened to lower Yahoo's value to potential buyers.
The RiskMetrics' endorsement Thursday is particularly significant for Yahoo because it comes from the oldest and largest shareholder advisory firm.
Yahoo's deal with Icahn, reached Monday, lowered the stakes of the director vote that will take place the company's Aug. 1 annual meeting. Under the agreement, Icahn will join an expanded Yahoo board along with two allies that must be approved by the Sunnyvale, Calif.-based company.
The deal ensures Icahn will be involved in any discussions involving a proposed sale of all or part of Yahoo.
Icahn, a billionaire, bought a 5 percent stake in Yahoo in hopes of working out a sale to Microsoft, which withdrew a $33 per share offer in early May after Yahoo Chief Executive Jerry Yang asked for $37 per share.
Yahoo has since indicated it will sell for $33 per share, or $47.5 billion, but Microsoft has now said it wants to buy only Yahoo's online search operations. Yahoo's current board, though, has concluded it would be a bad idea to spin off its search engine.
Until Thursday's compromise, Icahn had been leading a shareholder rebellion aimed at replacing Yahoo's directors, including Yang, with his own slate of hand-picked candidates.
Even though Icahn has backed off, many Yahoo shareholders remain upset with the board handling of the Microsoft negotiations and some were expected to lash out at the Aug. 1 meeting.
But the protests probably won't amount enough to result in majority votes against any of the eight incumbent directors up for re-election. As part of the Icahn settlement, one of Yahoo's current directors—Activision Blizzard Inc. CEO Robert Kotick— voluntarily agreed to step down.
(© 2009 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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