After spending weeks ridiculing Yahoo Inc.'s board of directors, nettlesome investor Carl Icahn has piped down and won't even be at the Internet company's annual meeting on Friday. But other prickly shareholders are expected to be there to skewer Yahoo's leadership for spurning a $47.5 billion takeover offer from Microsoft Corp. that looks even sweeter with each passing day. Since Microsoft withdrew its offer in early May, Yahoo's stock price has plunged 30 percent to leave the company's market value nearly $20 billion below what shareholders would have been paid if Yang and the rest of the board had accepted the bid. "The Microsoft negotiations were just the latest example of the negligence by this board," said Eric Jackson, a Yahoo shareholder who plans to confront management during Friday's meeting. "There is still a lot of anger and frustration among shareholders right now." Jackson, who represents a group of stockholders with about 3.2 million shares, spearheaded a protest that culminated in Yahoo co-founder Jerry Yang replacing Terry Semel as Yahoo's chief executive six days after last year's annual meeting. Yahoo shareholders were agitated even before the breakdown in Microsoft talks because the company's profits and stock have been sinking for several years, despite an Internet advertising boom. Since 2005, Yahoo has lost nearly half its market value. Meanwhile, the stock of rival Google Inc. has climbed 15 percent to create an additional $20 billion in shareholder wealth. Yahoo shares fell 14 cents Thursday to $19.89, slightly above their price when Microsoft made its initial takeover bid six months ago.
As payback, many shareholders are expected to oppose the re-election of Yahoo's current board in a largely symbolic gesture. But Yahoo still has the support of many shareholders, including one of its largest, Legg Mason Capital Management Inc. The Baltimore, Maryland-based investment firm, which owns a 4.4 percent stake in Yahoo, pledged its support for the current directors two weeks ago.
"We believe the board is independent and focused on value creation for long-term shareholders," Legg Mason Chairman Bill Miller said at the time.
If there's enough opposition on Friday, Yahoo shareholder Mark Nelson thinks Yang may step down.
"I haven't spoken to anyone who thinks, 'Hey, this is the right team to lead Yahoo,"' said Nelson, a partner at Mithras Capital, which owns 1.7 million Yahoo shares. "I hope there will be enough shareholder pressure at this meeting for the board to realize they need to bring in someone else to run the company." Icahn, a blunt billionaire who will join Yahoo's board next week as part of a truce with the company, already has said Yang, 39, should be cast aside for a more seasoned CEO. That idea may get more support when two Icahn allies join the Yahoo board by Aug. 15. (Shareholders won't be able to vote on the merits of Icahn and his allies until next year's meeting. Friday's vote will be confined to Yahoo's incumbent board.)
Before he decided to work with Yahoo, Icahn had been campaigning to replace all nine of the company's directors with a slate of his own candidates. But he changed his mind in July after concluding he didn't have enough shareholder support to prevail. Icahn remains highly motivated to boost Yahoo's stock price because he paid about $25 per share to acquire a 5 percent stake in the company. For now, he seems willing to give Yang more time to prove he has the chops to be CEO.
"While we still disagree on many points, I have great hope 'this will be the beginning of a beautiful friendship,"' Icahn wrote on his blog on Thursday.
Icahn's opinions may be tempered by the terms of his peace pact, which prohibits him from disparaging Yang and the rest of Yahoo's directors.
To round out its board, Yahoo must choose two Icahn-endorsed candidates from a list of nine. Two of the choices have been mentioned as possible successors to Yang _ former AOL CEO Jonathan Miller and former Viacom Inc. CEO Frank Biondi Jr. But Yang still seems to believe he is the best man for the job. "I am as excited as I have ever been to lead this company," Yang told The Associated Press on July 22. "We have a sense of urgency to create value."
In his defense Friday, Yang is expected to highlight an advertising partnership with Google that is supposed to boost Yahoo's annual revenue by $800 million. That alliance still could be blocked by antitrust regulators.