Tuesday, June 3, 2008
Yahoo Shareholder Meeting August 1
Sunnyvale, CA based Yahoo! Inc. has set August 1st 2008 as the date for its next annual meeting of shareholders. According to the SEC filing, the meeting will be held at the Fairmont San Jose, located at 170 South Market Street, San Jose, California, on August 1, 2008, at 10:00 a.m. Most of the SEC filing is routine stuff, but there are a couple of points worth noting, both related to the previous post regarding the shareholder lawsuits and the new severance pay plan.
Since February 11, 2008, five separate stockholder lawsuits were filed in Delaware Court of Chancery against members of the Yahoo! Board of Directors (the “Delaware Lawsuits”). Two of the Delaware Lawsuits (by plaintiff Wayne County and by plaintiff Plumbers and Pipefitters Local Union) were voluntarily dismissed. All of the remaining Delaware Lawsuits have been consolidated (lead plaintiff is the Police and Fire Retirement System of the City of Detroit) and lead counsel was appointed. The plaintiffs in the Delaware Lawsuits purport to assert class claims on behalf of all Yahoo! stockholders, except defendants and their affiliates and generally allege that defendants breached fiduciary duties by rejecting Microsoft Corporation’s February 1, 2008 unsolicited proposal... Plaintiffs filed an amended complaint to add a claim for unspecified damages based on Microsoft’s May 3, 2008 announcement that it was withdrawing its proposal to acquire the Company and to allege additional facts.
Note that the Detroit Pension funds mentioned above are the ones who forced the disclosure of all the documents related to the lawsuit, as mentioned in the previous post.
And this regarding the severance pay. Its actually called the 'Change in Control Severance Plan'. And here's the kicker. If Icahn gains control of the Board, the severance plan gets activated.
A “change in control” would generally be triggered under the Change in Control Severance Plans by a person or group of persons acquiring more than 40% of the Company’s voting stock, certain changes in the membership of the Board of Directors (as described in more detail below), certain mergers and other transactions where the Company’s stockholders owned less than 50% of the surviving entity, a liquidation of the Company or a sale of all or substantially all of its assets, or any other transaction deemed by the Board of Directors or the Compensation Committee to constitute a change in control of the Company. As previously noted, the Icahn Entities have provided notice that they intend to nominate their own slate of ten (10) nominees for election as directors at the annual meeting. If five or more of the Icahn Nominees are elected to the Board of Directors at the annual meeting, a change in control will be deemed to have occurred for purposes of the Change in Control Severance Plans.
What Jerry Yang has done here is to burn his bridges to cover the retreat. In simple terms, it means that as long as the current board is in control, the severance plan remains what it was previously. But if anyone else - Say Icahn or Microsoft, manage to gain control, then the new severance plan kicks in. Now look at this from the point of view of a Yahoo employee. As soon as the new entity/group takes control, the employee is automatically offered an unmatchable golden handshake. Given Yahoo's shaky future, its a dead certainity that a large part of its 13,800 employees will opt to quit. I'm not sure this is even legal, considering that such an arrangement is clearly a ruse to keep the existing Yahoo Board in control, regardless of the loss suffered by shareholders.
Update 1: Icahn sends letter to Roy Bostock, Chairman, Yahoo! Inc. Basically a repition of all the things mentioned above. And here's Bostock's response letter to Icahn, which is basically a repition of Yahoo's talking points.
Another slightly less noted development. Yahoo! Inc. let loose a series of coporate tie-ups and business arrangements, in tandem with President Susan Decker's keynote speech at Advertising 2.0 in New York. The tie-ups include Wal-Mart, which will use Yahoo display advertising, an agreement with CBS as a distribution partner for its audience network, and a tie-up with Havas Digital for a multi-year global advertsising partnership. Point is, I think Decker and Yang were kindof secretly hoping that these series of announcements would shift investor sentiment in their favor, and generate a bit of optimism about Yahoo's future. I think Yang mentioned as much in the recent D6 appearance, when he said that he had something up his sleeve related to display advertsising. Memo to Yang & Decker - It's too late.
Since February 11, 2008, five separate stockholder lawsuits were filed in Delaware Court of Chancery against members of the Yahoo! Board of Directors (the “Delaware Lawsuits”). Two of the Delaware Lawsuits (by plaintiff Wayne County and by plaintiff Plumbers and Pipefitters Local Union) were voluntarily dismissed. All of the remaining Delaware Lawsuits have been consolidated (lead plaintiff is the Police and Fire Retirement System of the City of Detroit) and lead counsel was appointed. The plaintiffs in the Delaware Lawsuits purport to assert class claims on behalf of all Yahoo! stockholders, except defendants and their affiliates and generally allege that defendants breached fiduciary duties by rejecting Microsoft Corporation’s February 1, 2008 unsolicited proposal... Plaintiffs filed an amended complaint to add a claim for unspecified damages based on Microsoft’s May 3, 2008 announcement that it was withdrawing its proposal to acquire the Company and to allege additional facts.
Note that the Detroit Pension funds mentioned above are the ones who forced the disclosure of all the documents related to the lawsuit, as mentioned in the previous post.
And this regarding the severance pay. Its actually called the 'Change in Control Severance Plan'. And here's the kicker. If Icahn gains control of the Board, the severance plan gets activated.
A “change in control” would generally be triggered under the Change in Control Severance Plans by a person or group of persons acquiring more than 40% of the Company’s voting stock, certain changes in the membership of the Board of Directors (as described in more detail below), certain mergers and other transactions where the Company’s stockholders owned less than 50% of the surviving entity, a liquidation of the Company or a sale of all or substantially all of its assets, or any other transaction deemed by the Board of Directors or the Compensation Committee to constitute a change in control of the Company. As previously noted, the Icahn Entities have provided notice that they intend to nominate their own slate of ten (10) nominees for election as directors at the annual meeting. If five or more of the Icahn Nominees are elected to the Board of Directors at the annual meeting, a change in control will be deemed to have occurred for purposes of the Change in Control Severance Plans.
What Jerry Yang has done here is to burn his bridges to cover the retreat. In simple terms, it means that as long as the current board is in control, the severance plan remains what it was previously. But if anyone else - Say Icahn or Microsoft, manage to gain control, then the new severance plan kicks in. Now look at this from the point of view of a Yahoo employee. As soon as the new entity/group takes control, the employee is automatically offered an unmatchable golden handshake. Given Yahoo's shaky future, its a dead certainity that a large part of its 13,800 employees will opt to quit. I'm not sure this is even legal, considering that such an arrangement is clearly a ruse to keep the existing Yahoo Board in control, regardless of the loss suffered by shareholders.
Update 1: Icahn sends letter to Roy Bostock, Chairman, Yahoo! Inc. Basically a repition of all the things mentioned above. And here's Bostock's response letter to Icahn, which is basically a repition of Yahoo's talking points.
Another slightly less noted development. Yahoo! Inc. let loose a series of coporate tie-ups and business arrangements, in tandem with President Susan Decker's keynote speech at Advertising 2.0 in New York. The tie-ups include Wal-Mart, which will use Yahoo display advertising, an agreement with CBS as a distribution partner for its audience network, and a tie-up with Havas Digital for a multi-year global advertsising partnership. Point is, I think Decker and Yang were kindof secretly hoping that these series of announcements would shift investor sentiment in their favor, and generate a bit of optimism about Yahoo's future. I think Yang mentioned as much in the recent D6 appearance, when he said that he had something up his sleeve related to display advertsising. Memo to Yang & Decker - It's too late.
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