Yahoo on Defensive at Shareholder Meeting
Yahoo was criticized by some shareholders on Friday for the way it handled Microsoft's attempted acquisition, but in the end there were fewer fireworks at its annual meeting of stockholders than some had expected.
Chairman Roy Bostock may have helped diffuse the concerns with a lengthy defense at the start of the meeting in San Jose, California, about how Yahoo handled the process. In a sometimes-impassioned explanation, he said Microsoft's bid had placed "a hell of a burden" on Yahoo's management at a time when it was trying to implement its new growth strategy.
"There was never a deal put on the table that was compelling enough that we, as the board, could look the shareholders in the eyes and say this is a good deal for you," Bostock said.
Some shareholders did have some terse words for the board. One suggested that Bostock "do the honorable thing" and step down. "I think you've overpaid for executive compensation, overplayed your hand with Microsoft and overstayed your welcome," the shareholder said during a question-and-answer period toward the end of the meeting.
Another said in an interview before the meeting that he had been "ecstatic" the morning Microsoft made its offer to buy Yahoo, and criticized the board for fumbling the deal. "They can regain my confidence, but they're going to have to prove themselves first," said Sam Tramiel, a private Yahoo investor and a former CEO of Atari.
But the Q&A period was not an endless barrage of criticism about the Microsoft deal, and a few shareholders had praise for Yahoo. One man congratulated the board for fending off "the green-tentacled octopus up in Redmond," referring to Microsoft, while another said she approved of Yahoo's plan to seek growth from emerging markets and mobile-phone users.
"Competition is good for the industry and for consumers, so I am happy that Microsoft did not succeed in acquiring Yahoo," she said.
At least as much of the Q&A focused on the way Yahoo does business in countries that stifle free speech and human rights. The shareholders were asked to vote on two proposals related to the issue, one of which asked the company to institute a policy that it will not host data about users in countries with repressive regimes, so that Yahoo can't be forced to hand over information that could lead to an arrest.
"Yahoo has actively participated in these human rights abuses, including the censorship of information and, in one case, turning over information to the Chinese government" that led to the arrest of a Chinese journalist, said Patrick Doherty, who presented the proposal for the New York Office of the Comptroller, which holds Yahoo stock.
A related proposal, submitted by an individual shareholder, John Harrington, would have had Yahoo form a committee to oversee its activities related to human rights. Harrington said Yahoo has been accused of having "the moral fiber of pygmies."
"I think that might be denigrating to the pygmies," he said, getting a laugh from the 200 or so stockholders here. "I believe you are moral, but the only morality you believe in is profit and self-interest."
Yahoo's board recommended that shareholders vote against the human rights proposals, which were also submitted at last year's meeting and voted down by a wide margin. Executives here said the company already has adequate policies in place to protect human rights.
Bostock briefly talked about the activist investor Carl Icahn, who had been trying to replace Yahoo's entire board but has now reached a deal that makes him one of its directors.
"Carl is a smart guy," Bostock said. "He is, as some would say, a good guy despite the bad things written about him. ... We look forward to him being a productive member of the board."
Yahoo President Sue Decker also spoke here. She said Yahoo is testing a new platform that will make it easier for advertisers to buy advertisements across all of Yahoo's properties. It will launch later this quarter, she said.
CEO Jerry Yang reiterated the company's growth strategy, which is based on creating better "starting points" for Internet users to begin their Web experiences, as well as expanding through mobile advertising and emerging markets.
In the key vote of the day, on the proposal to re-elect Yang and the rest of Yahoo's current board, the company's management prevailed.
Thomas Hillesland, a private investor and retired engineer from San Ramon, California, said he takes a longer-term view of the Microsoft deal than some other investors who seek quick profits. He said he doesn't like a lot of big mergers because the acquired company disappears.
"You have to think about what's going to be good for the company in the longer term. Microsoft has swallowed a lot of companies, but I'm not sure their products are better," he said.