By Erika Morphy E-Commerce Times
08/05/08 4:21 PM PT
A tabulation error made it appear that Yahoo CEO Jerry Yang had garnered more than 85 percent of the votes cast by investors at the company's shareholders meeting last week, but a recount adjusted that figure downward. In fact, nearly 34 percent of voters withheld their support. Chairman Roy Bostock was similarly affected by the revision.
By now, Yahoo (Nasdaq: YHOO) CEO Jerry Yang must be feeling as though he simply cannot catch a break. He has weathered a succession of setbacks over the past few months, since Microsoft (Nasdaq: MSFT) launched its unsuccessful bid to acquire the portal. Now it turns out that he doesn't have as much shareholder support as he thought.
A tabulation error by an outside company resulted in overreporting of pro-Yang votes after a board election on Aug. 1, Yahoo reported Tuesday. One of Yahoo's largest institutional shareholders -- Capital Research Global Investors -- triggered the recount by demanding an investigation into the results.
Yang received a thumbs-up from 66.3 percent of the shareholders, with 33.7 percent withholding support, according to corrected figures in Tuesday's announcement. Original results showed 85.4 percent of the shareholders favoring Yang and 14.6 percent withheld.
Public Embarrassment
Yahoo reported the incorrect tally because of a transmission error by Broadridge Financial Solutions, which counted the votes, the company said. However, the controversy surrounding the vote extends beyond any mere counting errors.
"The recount demand is really about trying to express public dissatisfaction with CEO Jerry Yang and perhaps, even more, Chairman Roy Bostock for their perceived failure to capitalize on the Microsoft opportunity," Greg Sterling, principal with Sterling Market Intelligence, told the E-Commerce Times before the corrected results were announced.
The original tally showed Bostock with 79.5 percent support and 20.5 percent of votes withheld. He actually got 60.4 percent of the votes, with 39.6 percent withheld, Yahoo said.
Ways to Make a Fresh Start
The mistakes don't affect the makeup of the board. Still, Yahoo should take the affair seriously, N. Venkat Venkatraman, a business professor at Boston University, told the E-Commerce Times.
"This is important particularly because of the lack of transparency in the Microsoft negotiations, with both sides taking issue with the statements made by the other party," he said.
"Just as AOL lost its brand image after the Time-Warner merger fiasco, it is easy for Yahoo to lose its brand leadership position if it does not innovate and reinvent itself. I think Yang has the rest of 2008 to show that he has not decapitated the company that he and David Filo founded."
Immediately following the shareholder meeting, the board
appointed activist investor Carl Icahn to the seat vacated by Robert Kotick, and voted to expand from nine to 11 members.
Now, "it must show that the inclusion of the three new board members is more than a symbolic gesture to pacify Carl Icahn" by tapping other competent people, Venkatraman said.
The board should also work out credible plans to move Yahoo shares above the US$20 mark, he said.
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