Glass Lewis Half Empty
Differences of opinion are what make the financial markets go round. And it would appear that we have some strong ones among the proxy services advising Yahoo shareholders on how to vote at the upcoming election of Yahoo’s board members. This week Egan-Jones Proxy Services threw its support behind all eight board members up for re-election at Yahoo’s Aug. 1 shareholder meeting, arguing that all are qualified for the job.
Glass Lewis & Co., however, does not share that opinion. In a report issued Wednesday, the proxy advisory firm recommended getting rid of three Yahoo (YHOO) directors: Chairman Roy Bostock and directors Ron Burkle and Arthur Kern. All three sit on the company’s compensation committee, of which Glass Lewis seems to take a very dim view. From the Glass Lewis report:
Nominees BOSTOCK, BURKLE and KERN all served as members of the compensation committee in fiscal year 2007, during which time the Company paid more compensation to its top executives but performed worse than its peers. The members of the compensation committee have the responsibility of reviewing all aspects of the compensation program for the Company’s executive officers. It appears to us that members of this committee have not effectively served shareholders in this regard. Further, we are concerned that the committee approved the adoption of the Change in Control Severance Plans with potential brobdingnagian payouts, potentially discouraging a takeover.
Additionally, Mr. Bostock serves as chairman of the nominating and corporate governance committee. At last year’s annual meeting, Messrs. Bostock, Burkle and Kern each received over a 31 percent vote against their re-election. In our 2007 Proxy Paper, we recommended voting against each of these directors due to the Company’s excessive compensation practices. We believe this raises concerns about whether the nominating and corporate governance committee is fulfilling its duty to shareholders, considering that all three directors remain on the board. Moreover, we find it disconcerting that Messrs. Bostock and Kern continue to serve on the committee charged with overseeing governance issues for the Company.”
It’s worth noting, as well, that Glass Lewis was not without concerns about Carl Icahn. In its report, the advisory service noted:
Carl Icahn, chairman of Icahn Enterprises G.P. and CEO of Icahn Capital LP, currently serves on a total of seven public company boards. His total number of directorships will expand to eight once he is appointed to Yahoo’s board. We believe that the time commitment required by this number of board memberships may preclude Mr. Icahn from fulfilling his responsibilities to this Company’s shareholders. We believe shareholders should monitor Mr. Icahn’s ability to devote sufficient time and attention to the Company.”