Proxy War Against Yahoo Board by Third Point & LoebBy: Shawn Hess - May 2, 2012
Managing partner of Third Point hedge fund, Dan Loeb is waging a proxy war against Yahoo’s board of directors. Business Insider reports Loeb has had enough of Yahoo’s poor decision making and weak additions to the board. Earlier this year we reported on Loeb’s contempt for the board and their decision not to pursue a deal to join forces with software giant, Microsoft.
In a letter to Yahoo! Shareholders at the end of March, Loeb expressed his dissatisfaction with the boards newest appointees and the direction of the company overall:
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.
Loeb was offered two seats on the board of directors, one of his choosing and one which the board must also approve of, but they were adamant about Loeb himself not being one of them. This did not sit well with Loeb or pacify his inclination to wage a proxy war on the board.
Yesterday Yahoo released a letter to the shareholders reasserting that Loeb would not become part of the Yahoo board:
Regrettably, our efforts to avoid a proxy contest with Third Point were unsuccessful. Following the recommendation of the Nominating and Corporate Governance Committee, we offered Third Point two board seats, including one of its nominees and a second mutually agreeable candidate, which would bring Third Point’s perspective into the boardroom.
Unfortunately, Mr. Loeb declined to end his proxy solicitation on that basis, insisting that there could be no settlement unless he was personally appointed to the board. The board continues to believe that Mr. Loeb himself does not bring the relevant skill set and experience to the board, particularly in comparison to the candidates selected by the board.
In addition, we believe that, based on the specific qualifications of Third Point’s nominees relative to Yahoo!’s business and opportunities, the candidates nominated by the board’s Nominating and Governance Committee are significantly superior to those proposed by Third Point. Nevertheless, we want to emphasize that we remain committed to an open dialogue with all our shareholders and to working in a constructive manner with Third Point.
Yahoo board member Eric Jackson, an activist in his own right, is unhappy with the board’s decision not to let Dan Loeb join the board. He believes Loeb is exactly the type of addition they need at Yahoo, and has been very vocal about his sentiments.
Eric Jackson’s Twitter commentary on Dan Loeb’s credentials:
Why is Dan Loeb’s “skill-set” for $YHOO’s board inferior to David Kenny, recently fired by $AKAM after a failed one year’s tenure?
Why is Dan Loeb’s “skill-set” for $YHOO’s board inferior to Sue James, President of the Tri-Valley Animal Rescue?