Major shareholder advisory firm backs Yahoo board
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., is recommending 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 sit 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's stock price stood at $20.53 after gaining 14 cents Thursday.
Spurred by its unhappy shareholders, Yahoo has indicated it's willing to sell for $33 per share, or $47.5 billion, but Microsoft now says 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.
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