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Yahoo shakes up board in a bid to appease angry investors


This news story was published on February 8, 2012.
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By Jessica Guynn and Nathan Olivarez-Giles, Los Angeles Times –

LOS ANGELES — Yahoo Inc. is cleaning out its boardroom.

Its beleaguered chairman and three other directors will leave in the latest in a series of attempts to appease investors riled up over Yahoo’s inability to turn around its flagging fortunes.

“Fresh viewpoints are certainly welcome in the Yahoo boardroom,” BGC Partners analyst Colin Gillis said. “Unfortunately Yahoo needs two things: It needs a direction and it needs time to pursue that direction.”

And, he said, Yahoo is running short on both.

Yahoo, once a powerhouse on the Web but now widely seen as a laggard to Google Inc. and Facebook Inc. in drawing eyeballs and ad dollars, bowed to growing pressure from Wall Street to shake up the company after years of declining growth.

Hedge fund Third Point, which owns about 5 percent of Yahoo, has been demanding an overhaul of the board since last year. It has threatened a proxy fight.

“If you are on this board, you don’t want to be running for re-election,” Gillis said. “There is very little incentive for them to stay.”

Roy Bostock, who has been Yahoo’s chairman since 2008, announced in a letter to shareholders Tuesday that he and three other directors would leave and that two independent directors had been elected. Bostock billed the board shake-up as a way to speed Yahoo’s effort to reinvent itself.

Bostock, Gary Wilson, Arthur Kern and Vyomesh Joshi will not stand for re-election at the next shareholders’ meeting. Alfred Amoroso, a former IBM executive who ran digital home entertainment products company Rovi Corp. until last year, and Maynard Webb, eBay Inc.’s former chief operating officer, will join the board.

It’s unclear who will succeed Bostock as chairman.

The board upheaval, which was widely expected, came a month after the surprise resignation of founder Jerry Yang as a Yahoo director. Investors held Bostock accountable for the collapse of Microsoft Corp.’s 2008 bid for Yahoo for $44 billion, more than twice what it’s worth today.

It also gives the board a clean break from past missteps. All of the Yahoo directors who will remain after the company’s next shareholder meeting this summer joined the board after it spurned Microsoft’s offer.

Yahoo’s board has taken heat from investors frustrated with Yahoo’s failure to pull off a turnaround even as the online advertising business gets more competitive with Facebook preparing to sell its stock to the public for the first time. Yahoo has also made slow progress in selling or spinning off its Asian assets: China’s Alibaba Group and Yahoo Japan.

Yahoo started a strategic review after the ouster of former Chief Executive Carol Bartz. The company has considered the possibility of selling itself, going private or breaking itself up. In January, Yahoo named Scott Thompson, president of online payments service PayPal, as its CEO.

“We have engaged with potential investors and reviewed proposals concerning an equity investment in the company, although at this time there have not been any proposals which have been deemed by the committee to be attractive to our shareholders,” Bostock said.

Yahoo had made progress in its deliberations over its future direction, including “active discussions” with its Asian partners, Bostock said but added: “The complexity and unique nature of these transactions is significant.”

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