Yahoo Board, Dazed and, Of Course, Confused
It would be nice in a dramatic sense to hope the Yahoo board was at each other’s throats just about now–like some movie scene with lots of angry wrangling, noisy sides-taking of the emotional die-hards versus the coldly pragmatic ones and a general sense of pins-and-needles.
That was, of course, the premise of a piece done late last week by the New York Post with the hyped headline, “Board Bucks Yang,” as if the Yahoo co-founder were some incompetent cowboy and the board a spirited mustang.
As if. Or, more precisely, don’t shareholders wish.
Nonetheless, the piece rocketed around the Web as if it were gospel, lending hope for the always-a-bridesmaid Microsoft (MSFT) in its unsolicited bid to acquire Yahoo (YHOO) by asking in a not-so-nice way.
But, I am betting on inertia here, although it must be said this event has given the moribund board of the company a true jolt it has long needed.
For example, it acted rather quickly to reject the Microsoft offer and has been working overtime to attempt to back Yahoo CEO and Co-Founder Jerry Yang’s efforts to find alternatives.
Too bad it took a takeover battle to wake Yahoo’s directors from their persistent narcoleptic state.
So, rather than some mano-a-mano between Yang and newly installed Chairman Roy Bostock, getting ready to rumble like this is the Sharks and the Jets, try to remember that these are the exact same cast of characters–now simply minus former CEO and Chairman Terry Semel–that has been too sanguine as the situation at Yahoo has deteriorated.
In fact, one of the more consistent characteristics of Yahoo over the past few years has been its dithering nature, and its not-so-engaged board has been a prime locus of that.
Yahoo is also a conflict-averse place, whether collegiality is the rule, even if it is not the best solution (and in deep contrast to the aggressively argumentative folks at both Microsoft and Google).
As the Internet giant has lost market share in the search business, been unable to focus on its core mission with a lot of needless experimentation, seen morale drift downward and employees head for the door, reneged on its 100-day, no-sacred-cow change promise, and had a relentless decline in stock price, its board has done not so much.
Well, except dole out massive stock grants to top managers.
To be fair–and let’s be honest here, shall we?–this is the modus operandi of most directors, who are pretty clueless and hands-off when it comes to the companies they are supposed to be overseeing. Most are captives of management and don’t spend a whole lot of time rocking the boat.
I did two books on the triumphs and tribulations of AOL, for example, and I was always amazed by the what-me-worry? involvement of the various board members, even as its fate was plummeting downward.
But foxholes and bombs blasting overhead do bring out the courage in some, so perhaps some of Yahoo’s board members are suddenly in a mood to agitate (mostly, I suspect, so they don’t get sued by angry shareholders).
But let’s hope it is not just panic and a need to look busy now that Microsoft has pulled the curtain away.
In any case, a few weeks ago, just before Microsoft made its offer, I did a post called “Say Hello to the Yahoo Board Members” to introduce its directors.
Why? As I wrote then: “With everything from consistently persistent takeover rumors, a still-lagging stock price and continued scrutiny on its moves to revive itself, the company’s managers and–it must be assumed–its directors obviously face challenges in the year ahead.”
Thus, I republish it in its entirely below, adding my bet on who is anti-sale, who is pro-sale and who is on the fence:
First among equals is obviously Yahoo CEO and Co-Founder Jerry Yang, who needs no introduction. Born in Taiwan and raised in San Jose, Calif., he has been trying to bring back the company he founded with David Filo since taking over the top slot at Yahoo last June. The obviously iconic figure within the company, he occupies the hottest seat of all. Some think his leadership has not been nearly bold enough, while others think his steadier approach to Yahoo’s revival is just what the company has needed. [ANTI-SALE]
Terry Semel served as Yahoo CEO from 2001 to 2007. After he left that job when the company’s troubles became more pronounced (to be fair, Semel did do a great job getting Yahoo back from its last brink when the first bubble popped), the former Hollywood mogul kept his title as chairman. He is also on the board of Polo Ralph Lauren, as well as many arts and cultural organizations. Recently, Semel revived his Los Angeles-based new-media investment firm, Windsor Media, and rumors abound to his intentions–including possibly making a play for a Hollywood studio. Big question: Will Semel continue as chairman of Yahoo in 2008? [GONE!]
What to make of Roy Bostock, who has been on Yahoo’s board since 2003? I’ll tell you what: If Semel were to step down as chairman, the chatter is that the former top-level advertising exec (chairman and chief executive officer of D’Arcy Masius Benton & Bowles) is best suited to the job, given the importance of Yahoo’s ad business. Bostock also serves now has chairman of Northwest Airlines and is on the board of Morgan Stanley and is a principal at Sealedge Investments LLC. [PRO-SALE]
Ron Burkle, founder and managing partner of the Yucaipa Companies, a private investment firm, has been a director since 2001. The high-profile Burkle, of course, is better known for being best billionaire buddy of Bill Clinton (and big fund-raiser for Hillary Clinton). He is a curious choice to be on the board, although he is said to add an interesting perspective and also has obvious experience in retail and distribution (largely in the supermarket industry). He is also on the boards of Occidental Petroleum and KB Home. [PRO-SALE]
Vyomesh Joshi joined the Yahoo board in 2005. He probably brings a good consumer product perspective to the company from his perch as executive vice president of the Imaging and Printing Group at Hewlett Packard, a $26 billion business with an operating profit of $3.8 billion, which is a whole lot of the kind of ink Yahoo needs. The longtime HP exec also has responsibilities in the entertainment arena for HP, which should be a boon to Yahoo. [ON-THE-FENCE]
The same goes for Robert Kotick, the chairman and CEO of games maker Activision, which recently merged with Vivendi’s Blizzard Entertainment unit, to create one of the biggest gaming companies in the world. Yahoo could use a little Guitar Hero buzz that Kotick’s company has gotten from the third version of the popular interactive game, a big holiday success, and also Blizzard’s World of Warcraft. [ANTI-SALE]
The other Northwest Airlines link is its Chairman Emeritus Gary Wilson, who has been on the Yahoo board since 2001. Wilson, who is also on the board of CB Richard Ellis, has an extensive financial background, working as the top numbers guys at places like Walt Disney (where he was a longtime board member) and Marriott. But can he lend his expertise to make the numbers work better at Yahoo? [PRO-SALE]
The only woman director, Maggie Wilderotter, joined last July and serves as the chairman and CEO of Citizens Communications, which is an independent provider of telecommunications services. That background is important for Yahoo, but perhaps more important is her experience as a SVP at Microsoft (rumored to be the main company interested in acquiring Yahoo). Wilderotter has also been president and CEO of Wink Communications and has held a number of jobs at AT&T, and she serves on the board of Xerox and the Tribune Company. [PRO-SALE]
Eric Hippeau, managing partner at Softbank Capital Partners, is one of the two granddaddy Yahoo board members (along with Arthur Kern), having served as a director since 1996. Before Softbank, he was chairman and CEO of Ziff-Davis in its heyday. Hippeau is also on the board of Starwood Hotels and Resorts Worldwide. [ANTI-SALE]
Arthur Kern has also been on the Yahoo board since 1996. Kern made his fortune selling off American Media, an owner of radio stations, which he co-founded and ran. Kern now invests in marketing and media companies. (BoomTown, with great regret, has never met him after all these years–lazy, lazy BoomTown! And everyone says how nice he is. Lunch, Arthur?) [ANTI-SALE]
Ed Kozel, the CEO of the start-up Skyrider (a P2P search engine), is perhaps the most experienced technologist on Yahoo’s board and another key member of the board, say many, where he has served since 2000. He’s been a VC (Open Range Ventures), a consultant (Integrated Finance) and also was a longtime Cisco exec (he was CTO and SVP of business development there) and board member. He’s also been on the board of Reuters and is a director for Network Appliance. [ON-THE-FENCE]