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Lately, Yahoo has proved it isn’t scared of getting into a bloody fight. First with its formal patent lawsuit against many large social networks, and now with an act of defiance that’s sure to rile up some of Yahoo’s biggest shareholders.
Today the company announced that it’s hiring three new high-profile directors, but one of the company’s largest shareholders, Dan Loeb of Third Point, doesn’t feel that the board was taking his suggestions for four new directors seriously and he’s planning to file a preliminary proxy statement with the Securities and Exchange Commission, as VentureBeat reported last week.
The new directors announced today are former Discovery Communications COO Peter Liguori, former American Express EVP John D. Hayes, and former IAC chief finance officer Thomas J. McInerney.
Given that Third Point has a six percent stake in Yahoo, Loeb had his own slate of proposed directors, including former NBC chief Jeff Zucker, former MTV chief operating officer Michael Wolf, turnaround expert Harry Wilson, and himself, naturally. He claims that his candidates each got one brief call from the current board, which wasn’t even classified as an official interview.
“The Board remains open to hearing Third Point’s ideas and to working constructively with Third Point, but believes that appointing Mr. Loeb to the Board is not in the best interest of the Company and its shareholders,” Yahoo said in a statement. The company also stated that it was open to hiring Wilson and one other director to be mutually decided upon, but Loeb apparently rejected that offer.
It appears that Third Point will follow through on its plans to wage a proxy battle. In a response to Yahoo’s announcement, the investment firm issued the following statement:
Third Point, Yahoo! Inc’s is disappointed by today’s announcement by Roy Bostock, the Company’s lame duck outgoing Chairman, and its Board of Directors. Since we launched our campaign for a better Yahoo!, our goal has been clear: to fix a dysfunctional Board by adding new Directors who are truly independent and squarely aligned with shareholders to increase Yahoo!’s value.
Third Point offered several significant compromises to strike a deal and avoid a proxy contest. Today, the Board has shown yet again that they are unable to execute deals that are in the Company’s best interests. Sadly for shareholders – who will once more bear the costs – the consequence of the Board’s refusal to accept Third Point’s shareholder-friendly proposals will be a time-consuming and distracting proxy contest that the Company can ill-afford.
The Board’s decision today demonstrates once again that one of Yahoo!’s paramount principles of corporate governance is “Shareholders not welcome”. In the absence of independent shareholder oversight, the Yahoo! Boards of the past five years have given shareholders five CEOs and strategic plans in as many years and seriously damaged the value of the core business, a fact masked only by the increasing value of Yahoo’s Asian assets.
Since the Board has left us with no choice but to take our case directly to our fellow shareholders, Third Point intends to move forward with a proxy contest. Yahoo!’s shareholders deserve a voice and a choice. We intend to provide them with one at this year’s Annual Meeting.