adminHedge fund and Yahoo investor Starboard Value signalled its intentions to fight a proxy war with Yahoo by submitting a complete slate of nine candidates for the troubled company’s upcoming board of directors election. New leadership is needed for the Web advertising and content company as it faces a possible sale of all or part of its core business and the managing of its stakes in Alibaba and Yahoo Japan, wrote Starboard CEO Jeff Smith in a letter to Yahoo shareholders yesterday.
“We believe the Board clearly lacks the leadership, objectivity, and perspective needed to make decisions that are in the best interests of shareholders,” said Smith, who included himself among the board candidates.
All nine members of the Yahoo board are up for election at the upcoming 2016 annual meeting with nominations due tomorrow. No date for the meeting has been set, but it is typically in late June.
Earlier this month, Yahoo added two new directors, former Morgan Stanley executive Catherine Friedman and former Broadcom chief financial officer Eric Brandt to fill seats vacated by tech entrepreneur Max Levchin and brokerage founder Charles Schwab.
Amid shareholder pressure, Yahoo CEO Marissa Mayer has begun a $400 million cost-cutting plan and a strategic review committee has been appointed to review potential a sale. Starboard, which previously asked Yahoo to spin off its stake in Alibaba valued at about $29 million, subsequently suggested it halt the spin-off because of potential tax penalties.
Instead, Starboard suggested Yahoo consider a sale of its core assets such as Yahoo Sports and Yahoo Mail.
Yahoo has been dragging its feet on a possible sale, Smith said in the letter.
Even though Verizon publicly expressed interest in Yahoo, Smith noted Verizon CFO Fran Shammo’s March 9 comment that the company had not yet received information from Yahoo to consider a bid, Smith said.
“These issues should be troubling to shareholders, and also cast doubts for prospective buyers of the Core Business as to whether the process is genuine and whether they should commit the time and resources to evaluating a bid and making a proposal,” Smith wrote.
“This is why we believe it is critical to elect a new Board that would provide much-needed credibility to a process that has been publicly criticized repeatedly for being too slow, fraught with conflicts of interest, and very difficult for highly qualified and motivated strategic and financial buyers to access much needed diligence information.”
Starboard’s candidates, in addition to Smith, are: former NBCUniversal exec Bridget Baker, ex-Deutsche Bank Securities technology M&A global head Tor Braham, former Cypress Semiconductor CFO Brad Buss, Charter communications director Lance Conn, one-time McAfee interim CEO and President Dale Fuller, former Tribune Company and DirecTV CEO Eddy Hartenstein, ex-Novellus Systems CEO Rick Hill and Bankers Trust COO Debra Janssen.
With so many important moves ahead, Smith said in the letter that “we cannot envision a scenario where the shareholders of Yahoo would entrust the current management team and Board with executing a standalone turnaround plan given the years of failed attempts under the current leadership.”
Externally, Yahoo is under additional pressure from digital ad competitors Google and Facebook. The company’s global net digital ad revenues are expected to decline 14 percent in 2016 to $2,83 billion, down from $3,28 billion last year. – Google News.
Online Reporter