Earlier today, Yahoo released a letter talking itself up to investors, introing a new Web site called Yahoo Forward to do more bragging and — you guessed it — giving yet another smackdown to activist shareholder Dan Loeb of Third Point.

The move comes as the proxy fight over the Silicon Valley Internet giant moves ever closer to its annual meeting, which is set to take place sometime this summer.

In the letter, which had precisely zero new news, Yahoo recounted again that it tried hard to settle things with its disgruntled shareholder, but underscored its desire not to have Loeb on the board.

Why? Because the man who owns about six percent of Yahoo — which is about 99.99 percent more than any other current board member, which seems to make him pretty interested in Yahoo’s fate — is not qualified to be a director.

“The board continues to believe that Mr. Loeb himself does not bring the relevant skill set and experience to the board, particularly in comparison to the candidates selected by the board,” the Yahoo letter read. “In addition, we believe that, based on the specific qualifications of Third Point’s nominees relative to Yahoo!’s business and opportunities, the candidates nominated by the board’s Nominating and Governance Committee are significantly superior to those proposed by Third Point. “

Buuuurn! (Not really.)

Loeb has his own Web site, Value Yahoo, which he launched last month to pillory Yahoo. He used it today to post an infographic titled “The Incredible Shrinking Yahoo.”

Buuuurn! (Not really.)

In fact, the real fire could start as early as next week and in the months ahead when other Yahoo investors start to pick sides in the fight.

That should really begin when independent proxy advisory firm Institutional Shareholder Service gives its recommendation on the issue to Yahoo investors.

A backing by ISS for another prominent proxy advisor Glass Lewis will help Loeb, although he still has an uphill battle to convince other shareholders to vote down Yahoo, which has a new CEO in Scott Thompson and a mostly new board.

That will be even more difficult, given how active Thompson has been in making a ton of productive-sounding moves, such as a recent restructuring which included 2,000 layoffs. While results will not be in for a while, a lot of we’re-hard-at-work strategery noise is probably a good tack for Yahoo.

The company will surely try to drop some more Yahoo bombs on Loeb to burnish its chances in the coming month — most likely first around a taxable sale of a large portion of its Asian assets related to new rounds of talks now taking place again, which might include a fat dividend to investors.

(Investors like fat dividends and the people who give them fat dividends, by the way!)

The company could also sell off some of its underperforming units, such as its advertising technology business and renegotiate its search partnership with Microsoft, all of which will give Yahoo more of a case that Loeb’s complaints are now unfounded.

But don’t count Loeb out, either. He’s a deft campaigner and also deserves some credit for forcing Yahoo to make several of its recent moves to oust weak members of its longtime dysfunctional board.

In that regard, at least, Loeb has been very relevant.

Here’s Yahoo’s letter today, in full (the odd bolding is all done by the company):

Yahoo! Shareholder Letter Outlines Forward Momentum and Urges Election of Its Board Nominees

SUNNYVALE, California, May 2, 2012 — Yahoo! Inc. (NASDAQ: YHOO), the premier digital media company, today released the following letter to all shareholders from its board of directors:

Dear Shareholder,

Since last August, Yahoo! has moved forward aggressively, implementing a plan to position itself for future success and to increase the value of Yahoo! for you, our shareholders.

* Just four months ago, we appointed CEO Scott Thompson, a highly accomplished and dynamic leader with the experience and expertise required to lead Yahoo! to renewed growth, innovation, and success. Scott is already moving the company forward fast — dramatically reorganizing the business around its core strengths with a mindset of focus, speed, discipline, and putting the customer first.

* The company has reconstituted the board of directors, with the optimal mix of expertise, experience, and fresh perspectives to accelerate the company’s transformation. We recruited five new, highly qualified independent directors through the Nominating and Corporate Governance Committee’s thorough search process. In addition, four of our directors volunteered not to stand for re-election at the 2012 shareholders’ meeting. As reconstituted, following the annual meeting a majority of Yahoo!’s directors will be new to the board this year, and all directors will have joined the board since 2010.

* Following a detailed and diligent review in an accelerated timeframe, the company produced a comprehensive strategic framework that will change what we do and, most importantly, how we do it to enable us to put our customers first in everything we do. We will deliver fun, engaging, and personalized experiences on all screens and forge strong relationships with our advertisers by producing measurable results, including consumer insights derived from our vast data, and delivering a higher rate of return on advertising spend. Specifically, we will focus all we do on the consumers who trust us to deliver personalized content and communications in our core businesses, and on the advertisers who want to connect with our consumers. Just as importantly, we are identifying what we will no longer do, in order to direct resources toward those businesses that generate the highest consumer engagement and the best return on our investment. As we excel in our core business, we will earn the right to pursue new growth opportunities.

* With this renewed operational focus, the company has defined a new organizational structure to support our core business and put resources closer to our customers. Effective May 1, Yahoo! will operate in three groups — consumer, regions and technology — all supported by our corporate teams. Each of these three groups will have clear accountability for getting results by delivering the best customer experiences. This more efficient structure will enable faster decision-making and more effective delivery of innovative products and services that measurably impact the bottom line.

* Beyond our core business, we are committed to continuing to be prudent stewards of our non-core assets and investments and to be thoughtful and diligent about monetizing their significant value at the right time and in the right manner. Should we do so, returning capital to shareholders will be a high priority.

In identifying qualified new members for the board, the Nominating and Corporate Governance Committee, led by its independent chairperson Patti Hart, conducted a thorough and impartial search process. Working with a leading executive recruitment firm and using the committee’s desired skill sets and experience for new board members, the committee identified over 100 potential candidates and sought input from a number of our major shareholders. Committee members engaged with over 20 individuals, including the four nominees proposed by Third Point. Committee members then conducted numerous in-depth interviews and carefully analyzed the qualifications of each candidate, including each of Third Point’s nominees. Committee members conducted additional interviews with those candidates that warranted further consideration, as determined by the committee in its meetings held throughout the process. Following completion of the full process, the committee and the board determined that the distinguished group of five candidates recently announced were the best choices, based on their individual accomplishments, experience directly relevant to Yahoo!’s business and its challenges, and records of value creation.

The new directors have strong records of significant accomplishment at the highest levels of media, advertising, marketing, Internet, technology, and finance, including corporate finance and restructuring, and insight into customers’ perspectives. The continuing directors are independent thinkers who bring impressive track records of success, and have been actively and constructively engaged as the company has developed its strategic framework to deliver renewed success and value to shareholders. We are challenging Yahoo!’s entire leadership team by asking tough questions, establishing rigorous goals, and developing a framework for strict accountability to move Yahoo! forward … fast.

Our focus now is on operating the company so that it delivers superior value to our shareholders. Supported by the many talented people who have contributed to charting our new course and inspired by the many shareholders, customers, and employees who have communicated passion for this great brand, we know that we will succeed.

Regrettably, our efforts to avoid a proxy contest with Third Point were unsuccessful. Following the recommendation of the Nominating and Corporate Governance Committee, we offered Third Point two board seats, including one of its nominees and a second mutually agreeable candidate, which would bring Third Point’s perspective into the boardroom. Unfortunately, Mr. Loeb declined to end his proxy solicitation on that basis, insisting that there could be no settlement unless he was personally appointed to the board. The board continues to believe that Mr. Loeb himself does not bring the relevant skill set and experience to the board, particularly in comparison to the candidates selected by the board. In addition, we believe that, based on the specific qualifications of Third Point’s nominees relative to Yahoo!’s business and opportunities, the candidates nominated by the board’s Nominating and Governance Committee are significantly superior to those proposed by Third Point. Nevertheless, we want to emphasize that we remain committed to an open dialogue with all our shareholders and to working in a constructive manner with Third Point.

At the end of the day, we recognize that you, our shareholders, will make the decision as to the board you want to lead your company. We are confident that when you assess our new board’s qualifications against Third Point’s slate, you will come to the same conclusion that we did—that this is the right board with the right mix of skills and experience to lead the company forward to create value for shareholders. We also recognize that we have a great deal of work to do to support and challenge the management team to move the company forward fast. We intend to keep ourselves and the company focused and we do not intend to let ourselves be distracted from the work at hand.

Yahoo! is looking forward, focused on delivering superior value to all of our shareholders. We are building momentum with a great leadership team, unified in focusing the company on its core strengths, redeploying resources to the most productive areas of the business, and equipping the company to invest in growth and innovation. Your new board includes individuals who have proven operating expertise in media, advertising, marketing, Internet, technology, and finance, and have consistently proven to be thoughtful and responsible stewards of shareholder value, with a strong emphasis on disciplined capital allocation and a willingness to embrace structural change. They are already contributing to the rigorous action plan to realize Yahoo!’s potential and deliver increased value for shareholders.

With new leadership and the new board, we are building a stronger, nimbler, more profitable Yahoo! that is better equipped to innovate for our customers and will ultimately increase the value of Yahoo! for all shareholders.

You can read more about Yahoo!’s actions to move the company forward and create shareholder value at http://yahooforward.com.

Thank you for your support.

Yahoo! Board of Directors

Spencer Platt | Getty Images News

According to sources close to the situation, Starbucks Chairman and CEO Howard Schultz and Accel Partners’ Kevin Efrusy will be stepping down from the board of Groupon.

Schultz’s departure will be effective today, but Efrusy — who was critical to the initial funding around the Chicago-based daily deals site — will not be standing for re-election at the company’s annual meeting in June.

The departures are voluntary, but sources said the pair will be replaced by two new directors with significantly more fiscal oversight experience, whom one source characterized as “accounting types.”

(Update: Groupon just posted a press release noting the board departures, with the names of the new board pencil pushers: Daniel Henry, CFO of American Express, and Deloitte Vice Chairman Robert Bass. Henry joins immediately in Schultz’s place. Full press release below.)

It is a move that is critical, given Groupon’s recent series of missteps around its financial reporting that have hurt both its reputation and, more importantly, its stock.

Interestingly, several sources noted that Schultz almost left the board right before Groupon’s public offering last fall, after several ongoing disputes with its management, but stayed on so as not to scuttle its IPO.

The board of the company has not involved itself as prominently in the accounting messes at the company, but it appears as if they will begin to now.

It must, given Groupon shares have been trading at a low of $11. Its stock has dipped to $10.98 today.

As Tricia Duryee wrote recently about the fall:

At that price, it is now worth just over $7 billion, down 57 percent since the company went public last November and well off the more than $10 billion it was valued at as tech’s hottest start-up of 2011.

Ironically, Groupon’s current market valuation is actually not much more than the $6 billion offered for it by search giant Google in late 2010.

The fall of Groupon has been swift, from the honorific of being the fastest-growing company ever to one that cannot keep control of that runaway growth.

That’s perhaps no surprise.

Perhaps most significantly, Groupon went public in just four years, delivering the biggest tech IPO since Google.

The quicksilver move was typical for it. In just two years’ time, the company ballooned from 37 employees to 9,625 and from serving five markets in the U.S. to 175 in North America alone. And that’s leaving out massive expansion abroad. In the past year, Groupon has acquired roughly 17 companies, including many international copycats.

The company also has entered many new segments, expanding from selling lower-priced and simpler deals on restaurants and spas to more complex and pricey arenas, including travel, physical goods and luxury items.

But Groupon is now learning that its original business does not work across just any segment, especially to more discerning customers of its higher-level and more expensive offerings.

In fact, it was those newer and potentially more lucrative markets that forced the company recently to revise the company’s fourth-quarter report after returns skyrocketed on luxury items, such as Lasik eye surgery.

The problems forced Groupon to lower revenue in the period by $14.3 million and net income by $22.6 million. It is now reporting a wider net loss of $64.9 million on revenue of $492 million, pushing it further away from its goal of profitability.

The company also disclosed at the time that independent auditors had noted “material weakness” in its financial controls. In addition, The Wall Street Journal reported that the Securities and Exchange Commission was examining Groupon’s revision. 

With many companies, investors might have shrugged off such accounting issues, but the impact on the stock has been greater since they are only the latest in a string of similar mistakes at Groupon.

In its pre-IPO period, for example, Groupon was forced to restate revenues after counting both its portion of the revenue and the revenue that goes to the merchant together. It also had to dump a controversial accounting metric that made the company look more profitable than it was, because it did not include important costs, such as critical online marketing expenses to attract new customers.

Those came after the company retracted a statement by Eric Lefkofsky, Groupon’s co-founder and executive chairman, who told Bloomberg in an interview that Groupon would be “wildly profitable.”

At least the wild part was accurate.

Much of the blame for these missteps by Wall Street is being aimed at CEO and co-founder Andrew Mason, the iconoclastic 31-year-old entrepreneur who is largely responsible for defining the company’s culture, as well as Jason Child and Joe Del Preto, the chief financial and accounting officers, respectively.

Child joined the company in December 2010, coming from Amazon, where he held several roles over a 10-year period — including VP of finance, international, and director of investors relations. Prior to joining Amazon, he worked at Arthur Andersen as a certified public accountant.

Del Preto has been Groupon’s chief accounting officer for the past year and, before that, he was the company’s global controller for three months. Before Groupon, he was controller and VP of finance at Echo Global Logistics and also served as controller at InnerWorkings, the same company where Mason was a computer programmer in his early career.

Mason, of course, is the best known and the person most responsible for establishing the company’s whimsical culture and managing — or mismanaging, depending on how you look at it — Groupon’s hard-charging growth.

It will also be up to him to turn it all around, as the company sinks in both value and investor regard. Since the restatement, Mason has said little about how he intends to do that. In February, when Mason concluded Groupon’s first-ever earnings call, he said: “Thanks, guys, this was a lot of fun, and I look forward to many more of these.”

It’s not clear fun will be on the agenda at his next outing on Groupon’s first-quarter call in mid-May.

Here is the official press release from Groupon on the board changes:

Groupon Appoints Two Directors to Board Daniel Henry, CFO of American Express, and Robert Bass, Vice Chair of Deloitte

CHICAGO — (BUSINESS WIRE) — Groupon, Inc (http://www.groupon.com) (NASDAQ:GRPN) today announced that Daniel Henry, the chief financial officer of American Express Company and Robert Bass, a vice chairman of Deloitte LLP will join its Board of Directors. Both will serve on the Audit Committee with Audit Chair, Ted Leonsis. Daniel Henry was appointed to the Board on April 26, replacing Howard Schultz, who has stepped down from the Board. Robert Bass will stand for election at the annual stockholder meeting to be held on June 19 following his retirement from Deloitte, replacing Kevin Efrusy, who will not stand for reelection at that time. “With their deep financial, accounting and operational experience, Dan and Bob will provide invaluable expertise to the Board going forward,” said Eric Lefkofsky, Groupon Chairman.

Daniel Henry, 62, has been the Chief Financial Officer of American Express Company since October 2007. Henry is responsible for leading American Express Company’s finance organization and representing American Express to investors, lenders and rating agencies. He has also served as Executive Vice President and Chief Financial Officer of U.S. Consumer, Small Business and Merchant Services and joined American Express as Comptroller in 1990. Prior to joining American Express, Henry was a partner with Ernst & Young.

Robert Bass, 62, has been a vice chairman of Deloitte LLP since 2006, and a partner in Deloitte since 1982. He will retire from Deloitte on June 2, 2012. Bass has specialized in e-commerce, mergers and acquisitions and SEC filings. At Deloitte, Bass is responsible for all services provided to Forstmann Little and its portfolio companies and is the advisory partner for Blackstone, DIRECTV, McKesson, IMG and CSC. He has also previously been the advisory partner for priceline.com, RR Donnelley, Automatic Data Processing, Community Health Systems and Avis Budget. He is a member of the American Institute of Certified Public Accountants and the New York and Connecticut State Societies of Certified Public Accountants.

“I’m thrilled to have been a part of Groupon’s development,” said Kevin Efrusy. “The Company is well on its way to becoming the operating system for all local commerce.”

“Howard and Kevin helped guide us on our journey to becoming a public company and I want to thank them and acknowledge their contributions,” said Groupon CEO Andrew Mason.

“During my tenure on the Board, I was impressed by the game-changing opportunities that Groupon has delivered for both merchants and customers on a global scale,” said Howard Schultz. “Groupon has a strong sense of mission and purpose, and as I move on to focus on my other time commitments, I wish them the very best.”

As I reported this morning, an activist fund aiming at AOL took a shot today, by putting up its slate of alternate directors.

In a nutshell, Starboard Value does not like the way CEO Tim Armstrong is running the company and thinks it can do better.

My two cents: The New York-based investment firm might have actually named some directors with some more recent media or Internet operating experience.

Several Internet execs approached by Starboard said they declined because they did not want to engage in a hostile action against AOL, even if they might agree with its assessment of the dicey situation for the company.

Instead, it’s investor guys, advisor guys and even an intellectual property guy. (Oh joy, so the plan is patent lawsuits a la Kodak?)

Yes, it is, according to Starboard’s letter to the AOL board.

It read, in part:

“We appreciate the ongoing dialog we have had with management and certain members of the Board over the past two months. However, we are extremely disappointed that our conversations regarding the issues raised in our letter have stalled. Specifically, we are troubled that the Company remains closed-minded to alternative value creation initiatives, and instead appears solely focused on pursuing the status quo.”

AOL fired back with a statement of its own, essentially saying things are just fine and Starboard’s characterization of the company was inaccurate.

Said AOL in a statement:

“We ended 2011 with our best performance as a company in the past five years, with substantial growth in advertising revenue, improvements in legacy revenue streams, and significant cost reductions. Our stock price has acted in kind, appreciating approximately 80% from our 2011 low and 20% year-­‐to-­‐date.”

Starboard declined to agree apparently.

Nothing like a he-said-he said, which follows a similar proxy fight situation at Yahoo!

Here is Starboard’s official press release with board selections, followed by AOL’s full statement:

Starboard Delivers Letter to AOL Board Nominates a Slate of Highly Qualified Candidates for Election at the 2012 Annual Meeting

NEW YORK, Feb. 24, 2012 /PRNewswire via COMTEX/ — Starboard Value LP (together with its affiliates, “Starboard”), one of the largest shareholders of AOL Inc. (“AOL” or the “Company”) AOL -0.95% with current ownership of approximately 5.2% of the outstanding shares, today announced that it has delivered a letter to the Company’s Board of Directors and has nominated a slate of highly qualified candidates for election to the AOL Board at the Company’s 2012 Annual Meeting.

The full text of the letter to the Board follows:

February 24, 2012

AOL Inc.
770 Broadway
New York, NY 10003
Attn: Members of the Board of Directors

To the Board of Directors,

Starboard Value LP, together with its affiliates (“Starboard”), currently owns approximately 5.2% of the outstanding shares of AOL Inc. (“AOL” or “the Company”), making us one of the Company’s largest shareholders. As you know, we have strong views regarding the current state and future direction of AOL, which we articulated in our comprehensive letter to the Board of Directors (the “Board”) on December 21, 2011 (the “December Letter”). We appreciate the ongoing dialog we have had with management and certain members of the Board over the past two months. However, we are extremely disappointed that our conversations regarding the issues raised in our letter have stalled. Specifically, we are troubled that the Company remains closed-minded to alternative value creation initiatives, and instead appears solely focused on pursuing the status quo. AOL is a diverse company with tremendous assets in a variety of different businesses that collectively are being undervalued in the marketplace. We continue to believe that significant opportunities exist to unlock value based on actions within the control of management and the Board.

As one specific example, in addition to the valuable assets highlighted in our December Letter, AOL owns a robust portfolio of extremely valuable and foundational intellectual property that has gone unrecognized and underutilized. This portfolio of more than 800 patents broadly covers internet technologies with focus in areas such as secure data transit and e-commerce, travel navigation and turn-by-turn directions, search-related online advertising, real-time shopping, and shopping wish list, among many others.

Since our initial public involvement in AOL, we have been approached by multiple parties specializing in intellectual property valuation and monetization, some of whom believe that (i) a significant number of large internet-related technology companies may be infringing on these patents, and (ii) AOL’s patent portfolio could produce in excess of $1 billion of licensing income if appropriately harvested and monetized. Unfortunately, several of these parties have expressed severe frustration that AOL has been entirely unresponsive to their proposals regarding ways to take advantage of this underutilized asset. The Company’s inaction is alarming given our understanding that many of the key patents have looming expiration dates over the next several years which could render them worthless if not immediately utilized.

As a result of the dynamics highlighted above, we are increasingly uncomfortable with the direction of the Company and the leadership of the Board. To this end, and as a result of our inability to arrive at a mutually agreeable resolution on the composition of the Board, we have identified the following highly-qualified candidates who have agreed to be nominated to the AOL Board at the 2012 Annual Meeting. We believe these nominees possess a well-balanced mix of skill sets to ensure that the Company evaluates, with an open mind and a keen sense of urgency, all alternative strategies to determine the best path forward to maximize value for all shareholders.

Starboard’s Director Nominees:

Ronald S. Epstein is the Founder and CEO of Epicenter IP Group LLC, a company dedicated to assisting patent owners in obtaining maximum value for their intellectual property. Previously, Mr. Epstein was Vice President and General Counsel of Brocade Communications Systems, Inc., and Director of Licensing at Intel Corporation. Before joining Intel, Mr. Epstein was a member of the Technology Licensing Group at Wilson, Sonsini, Goodrich and Rosati. Mr. Epstein has more than 20 years of experience in developing, optimizing, and transacting intellectual property asset portfolios, and has delivered significant value to patent owners from the sale or licensing of patents in over 150 transactions.

Steven B. Fink is currently a private investor with extensive experience building and managing technology companies. Mr. Fink is the former CEO of Lawrence Investments, LLC, a venture with Larry Ellison that owns and manages all of Mr. Ellison’s non-Oracle investments. Lawrence Investments founded and invested in numerous technology, education, medical, and biotechnology companies. Mr. Fink previously served as Chairman and CEO of Anthony Manufacturing Company, Chairman and Managing Director of Knowledge Universe, and Chairman and CEO of Nextera. Mr. Fink currently serves as Vice Chairman of Heron International, and as a member of the Board of Directors of K-12. Previously, Mr. Fink served as the Chairman of the Board of Leapfrog, Inc., and Spring Group until its sale in 2007.

Dennis A. Miller is a strategic advisor to Lionsgate Entertainment and has been focused primarily on investing at the intersection of media and technology. Previously, he was a General Partner at Spark Capital, a venture fund where he invested in companies including Twitter, CNET, and AdMeld. As a Managing Director for Constellation Ventures, he invested in companies such as Capital IQ. Mr. Miller has also served as Executive Vice President of Lionsgate Entertainment, Executive Vice President of Sony Pictures Entertainment, and Executive Vice President of Turner Network Television.

Jeffrey C. Smith is co-Founder and CEO of Starboard Value, a New York-based investment firm that is one of the largest shareholders of AOL. Mr. Smith has extensive public company board experience. Currently, he serves on the boards of Regis Corp., and SurModics Inc. Previously, he was the Chairman of the Board of Phoenix Technologies Ltd., and a director of Zoran Corporation, Actel Corporation, S1 Corporation, and Kensey Nash Corp. Mr. Smith also served as a member of the Management Committee for Register.com.

James Warner is the principal of Third Floor Enterprises, an advisory firm specializing in digital marketing and media. Previously, he was Executive Vice President of Avenue A | Razorfish, and served on the executive committee of aQuantive, its parent company. He has also served as President of Primedia Magazine Group, President of the CBS Television Network, President of CBS Enterprises, and Vice President at HBO. Mr. Warner served as a director on the board of MediaMind Technologies Inc until its sale to DG FastChannel, Inc. in July 2011.

It is our understanding that the terms of eight directors currently serving on the Board expire at the 2012 Annual Meeting. We would view any attempt by the Company to expand the size of the Board following the receipt of this letter, and given our previous discussions regarding board composition, as a tactic designed to manipulate the composition of the Board with regard to this year’s Annual Meeting. To preserve our rights, and in the event that the Company expands the Board prior to the 2012 Annual Meeting, we are therefore nominating five director candidates. We do not currently intend to seek to replace a majority of the Board. However, we do believe significant change to the composition of the Board is warranted given the qualifications of our nominees and the long-term underperformance of AOL.

We remain prepared to engage in constructive dialog with the Board to reach a mutually agreeable resolution. However, if an agreement is not reached, we are fully prepared to solicit the support of our fellow shareholders to elect a new slate of directors at the 2012 Annual Meeting who are committed to representing the best interests of all AOL shareholders. Starboard has a long history of working constructively with undervalued public companies to improve board effectiveness and enhance shareholder value. We hope that the Board will begin to recognize that our interests are directly aligned with those of all shareholders and that we only want what is best for AOL and its shareholders.

Best Regards,

Jeffrey C. Smith
Managing Member
Starboard Value LP

AOL ISSUES STATEMENT

NEW YORK, NY — February 24, 2012 – AOL Inc. (NYSE: AOL) issued the following statement in response to Starboard Value LP’s Letter to the AOL Board

The recent improved earnings results of AOL Inc. (“AOL” or “the Company”) highlight the significant progress we are making in executing our strategy to improve AOL’s growth trajectory and create meaningful shareholder value. We ended 2011 with our best performance as a company in the past five years, with substantial growth in advertising revenue, improvements in legacy revenue streams, and significant cost reductions. Our stock price has acted in kind, appreciating approximately 80% from our 2011 low and 20% year-­‐to-­‐date.

AOL’s Board of Directors and management team consistently review the strategy and performance of the Company and have taken meaningful actions to enhance shareholder return including the divestiture of non-core assets, significant cost reduction, a meaningful buyback of Company equity, and the implementation of an accountable and performance-based culture to operate against our clear strategy.

AOL has held several meetings with Starboard Value LP to address their questions. AOL communicated our continued intent to simplify AOL’s business and our efforts to accelerate shareholder value creation. AOL has offered Starboard Value LP an opportunity to help shape the Company’s Board of Directors composition and size. Unfortunately, Starboard Value LP has a singularly focused agenda and rejected this productive path to address their stated concerns and drive increased shareholder value.

Our Board of Directors and management team remain firmly committed to creating value for all shareholders. We have a valuable patent portfolio and several months ago, prior to Starboard’s first letter, the AOL Board of Directors authorized the start of a process, and hired advisors, to realize the value of these non-strategic assets. AOL has a clear plan to provide our consumers and customers with exceptional value, which we believe will lead to the creation of shareholder value. We will continue to aggressively execute and innovate on our strategy as we continue the turnaround of AOL.

First, let it be said that Yahoo shareholders are a long-suffering group, enduring year after year of mishaps and mishegas with unusual patience.

Still — with the stock of the Silicon Valley Internet giant continuing a worrisome downward movement, closing just below $15 a share both Wednesday and again yesterday — could some of its major investors decide to get angry at Yahoo management and its board at next week’s annual meeting?

So far, a mass shareholder withholding of votes for board members, as has happened before, is not likely, despite some serious recent missteps in China, a continued talent drain and worries about Yahoo’s search deal with Microsoft.

And, of course, there is Yahoo’s lackluster stock, which closed at $14.77 yesterday. That’s nearly a three percent fall for the week and a 6.5 percent decline for the month, losses in value that outpace most other Web companies.

It is not entirely clear exactly what is causing the fall. Culprits may include: An overall weak market; continued uncertainty about Yahoo’s Chinese assets and their worth; recent aggressive moves in the display advertising market by Google; and, well, investor dissatisfaction with its current management.

It will be interesting to see what the mood of the Yahoo annual meeting is next week, which is taking place next Thursday morning at a Santa Clara, Calif., location near its Sunnyvale HQ.

Also on the agenda, a big strategy meeting by Yahoo’s directors, who will apparently be querying its execs, especially CEO Carol Bartz, about the vision and growth plans to get the company’s share price cooking again.

Which is actually a meeting shareholders might like to watch.

Facebook COO Sheryl Sandberg already has one of the shinier resumes in Silicon Valley as a Harvard grad with stints at the World Bank, the U.S. Treasury Department and Google (GOOG), as well as a seat on the board of coffee kingpin Starbucks (SBUX).

She was also named one of Fortune magazine’s 50 Most Powerful Women this year, clocking in at No. 22.

Now Sandberg has been nominated to be a director on the Walt Disney Company (DIS) board, a position that will get rubberstamped at the entertainment giant’s annual meeting in March.

It’s an obvious pick for Disney, which needs to inject both Internet and social networking experience into the media giant, especially as it is one of the few such companies with such an iconic and personal relationship with its customers.

Mom and Dad must be so proud–not to mention the kids, since I am guessing that Disney board members get free passes to the front of the line at Space Mountain.

Thus, BoomTown has commissioned a survey from SurveyMonkey, where Sandberg’s husband, Dave Goldberg, is CEO, about exactly how I can get on the board of Facebook so I can query her on how to fatten up my resume.

To see her in action, here are two videos of interview highlights from Sandberg’s appearance at the sixth D: All Things Digital conference in 2008, with Facebook CEO Mark Zuckberberg.

Part One

Part Two

And here is the Disney press release:

Sheryl Sandberg Nominated to The Walt Disney Company Board of Directors

The Walt Disney Company (DIS) Board of Directors has nominated Sheryl Sandberg, chief operating officer of Facebook Inc., to be a new independent director, effective upon her election at the Company’s next annual meeting.

“Sheryl is an outstanding executive who can add incredible value to what is already a diverse and highly experienced group of directors,” said John E. Pepper Jr., Disney’s chairman. “She brings great expertise in the online world, considerable international experience and a deep understanding of consumer behavior.”

Sandberg has served as COO of Facebook, an online social utility company, since March 2008. In that capacity, she has been responsible for building Facebook’s operations globally and managing its sales, marketing, business development, human resources, public policy, privacy and communications functions. Facebook is now considered the number one global social network with more than 350 million members.

Prior to joining Facebook, Sandberg was Vice President of Global Online Sales and Operations for Google Inc., an Internet search engine company, a post she assumed in 2001. In that role, she built and managed Google’s online sales channels, which represents the majority of Google’s customers worldwide, for both AdWords and AdSense.

Sandberg, 40, is also a former Chief of Staff of the United States Treasury Department and previously served as a management consultant with McKinsey & Company and as an economist with The World Bank.

“Sheryl has been at the forefront of a technological revolution that’s opened up a world of new possibilities for consumers and which has greatly affected the way we do business,” said Robert A. Iger, Disney’s President and Chief Executive Officer. “Her unique insight, born of great practical experience, will be of considerable value to Disney’s shareholders.”

“Disney has remained an entertainment icon around the world for over 80 years by enthusiastically embracing change and new technologies,” said Sandberg. “It’s a tremendous honor to be nominated to the Disney board.”

Sandberg is also a director of Starbucks Corp. and serves on a number of nonprofit boards including The Brookings Institution, The AdCouncil, Women for Women International and V-Day. She received a Master’s Degree in business administration from Harvard Business School and a Bachelor’s Degree in economics from Harvard University.

Disney shareholders will vote on Sandberg’s nomination and the re-election of the Company’s other 12 directors at the next Disney annual meeting, March 10, 2010 in San Antonio, Texas.

BoomTown happens to be in the Seattle area today, deep in the heart of Microsoft territory, which apparently is now living in a state of “new normal” according to a missive by the software giant’s CEO, Steve Ballmer.

Well, it all looks the same to me, but in an “executive e-mail” post yesterday titled “The New Efficiency,” Ballmer has continued to stress a theme he has been sounding since earlier this year about how the entire business ecosystem has to reset itself.

Of course, the “new efficiency” is also the new buzzword around the upcoming launch of Windows 7 and part of an event Microsoft had in San Francisco yesterday, as well as a Web site.

Now, that’s efficient!

Wrote Ballmer in the long post:

“So what is the nature of this shift? After years of economic expansion fueled by unrealistic rates of consumption and unsustainable levels of private debt, the global economy has reset at a lower baseline level of activity. Today, people borrow less, save more, and spend with much greater caution.

“This is the new normal and it will be with us for some time to come. The issue now is how to respond.”

At the same time, in its proxy filing with the Securities and Exchange Commission in advance of its Nov. 19 annual meeting, Microsoft (MSFT) also revealed that the direct compensation of its top execs had been cut rather significantly in 2009 compared to 2008, even though the figures are still large to most average people.

Previously, Microsoft had announced that it had frozen merit-based raises for these execs.

Noted the proxy:

“Reflecting the company’s performance during the severe economic downturn, our executive officers, taken as a group, received Incentive Plan awards equal to 77% of their target awards and 29% lower than the comparable cash bonus and stock awards for fiscal year 2008.”

This was mostly due to declines in the “fair market value of the stock awards at grant,” which Microsoft tried to compensate for in a small way, mostly via increased cash incentive payments.

Ballmer, for example, took in $1.265 million compared to $1.34 before, while COO Kevin Turner’s take-home went from $8.6 million to $5.4 million.

And CFO Chris Liddell–who has been sounding the economic alarm at Microsoft over the last year as its results have weakened, but in a jauntily charming Kiwi accent–took in $3.5 million, down from a previous $4.8 million.

Said the filing about the exec haircuts, which you can read about in detail here:

“In each case, financial results were less than expected due to the impact of worldwide economic conditions on our business. As a result, the Incentive Plan awards to our named executive officers for fiscal year 2009 were below both the target level for their awards and their actual fiscal year 2008 incentive compensation awards.”

Pretty glum overall, much like the rainy winter-is-coming weather that has arrived here in the Pacific Northwest.

Still, in his post–in which he touts the upcoming Windows 7 and other Microsoft products as helpers to ease the economic pain, natch–Ballmer (pictured here at a recent analysts meeting) noted the silver lining in the dark clouds:

“I’m optimistic because I believe we are entering a period of technology-driven transformation that will see a surge in productivity and a flowering of innovation.”

Until then, apparently, as Ballmer also wrote: “With less, do more.”

“The compensation committee recognizes that Mr. Ellison has a significant equity interest in Oracle, but believes he should still receive annual compensation because Mr. Ellison plays an active and vital role in our operations, strategy and growth,” Oracle said in the filing. “Nevertheless, during fiscal 2010, Mr. Ellison agreed to decrease his annual salary to $1.”

A wise gesture from Ellison, who took a bit of flak at Oracle’s annual meeting last October after he made $543.8 million by exercising 36 million stock options. But still, a gesture only. Ellison is the fourth wealthiest person in the world, according to Forbes. He is also Oracle’s largest shareholder, with 23.4 percent of stock outstanding, as of July 21. That stake is valued at more than $25 billion today.

So as long as Oracle (ORCL) continues to outperform the market, Larry will be just fine.

“The compensation committee recognizes that Mr. Ellison has a significant equity interest in Oracle, but believes he should still receive annual compensation because Mr. Ellison plays an active and vital role in our operations, strategy and growth,” Oracle said in the filing. “Nevertheless, during fiscal 2010, Mr. Ellison agreed to decrease his annual salary to $1.”

A wise gesture from Ellison, who took a bit of flak at Oracle’s annual meeting last October after he made $543.8 million by exercising 36 million stock options. But still, a gesture only. Ellison is the fourth wealthiest person in the world, according to Forbes. He is also Oracle’s largest shareholder, with 23.4 percent of stock outstanding, as of July 21. That stake is valued at more than $25 billion today.

So as long as Oracle (ORCL) continues to outperform the market, Larry will be just fine.

BoomTown is at the lovely Santa Clara Marriott in Silicon Valley at the 2009 Yahoo annual meeting, liveblogging the event, which should be spectacularly dull.

Here is a rundown of what went on.

10:05 am: The meeting kicked off with a little video presentation with various and sundry television talking heads saying “Yahoo” in quick succession.

Actually, this was the year during which all of those hype-magnets repeated “Twitter”–the hottest media trend these days–so many times that it has began to make my ears bleed.

But I like the spirit of trying to make Yahoo (YHOO) seem relevant and innovative again.

Then, CEO Carol Bartz (pictured below) walked onto the small stage in the California Ballroom, declaring: “Well, that made me feel good.”

Exactly when does Carol not feel good?

She explained why: “I am having a ball,” speaking about her rehaul job at Yahoo, and then thanked shareholders after what was “a tough year last year.”

The board was introduced, with most of them being present at the meeting, except for Ron Burkle and Carl Icahn.

10:12 am: General Counsel Mike Callahan comes on with the blah-blah-blah about rules and votes.

I soon started thinking of the lovely breakfast pastries outside that I passed by outside. Drat!

This year, the 12-member board, now including Bartz, was up for reelection.

Last year, as you might remember, many of those board members were under siege by shareholder discontent.

Not in 2009. A major shareholder who was unhappy last year told me there would be no protest vote.

“Carol is doing a good job,” said the investor.

Yahoo was also asking for approval of its accounting firm, Price Waterhouse.

There were several important votes before the shareholders.

One was a standard one regarding executive compensation or a “say on pay” proposal, which was introduced by an outside stockholder.

Yahoo’s board recommended against it.

Another proposal regarded changes to be made to a 1995 stock plan and to a 1996 employee stock purchase plan.

The latter was most important, because it was a request to authorize more shares for future employee options grants. It will mean a large addition to the pool–30 million more shares–if authorized.

The stock will be used to keep valuable Yahoo talent in place. Good idea.

10:23 am: The floor was then opened for comments on the proposal and ballots were collected.

I was not on the edge of my seat.

Like clockwork or an election in the former Soviet Union, the board was elected, the stock plans approved and Price Waterhouse was in.

The “say for pay” proposal? It went down in defeat.

The people have spoken!

10:29 pm: Bartz took back the stage, which immediately livened things up.

She went through the history of her coming to Yahoo, which began with former Yahoo CEO and Co-Founder Jerry Yang (pictured here) asking if she was interested in the job at a Cisco (CSCO) board meeting.

Both are on its board.

Bartz also briefly recounted her meeting with Yang at his house, although she minimized the insulting aspect of the story.

She has maximized it in other tellings–such as in an onstage interview with me recently at the D: All Things Digital conference.

The basic thrust of the story was that Yahoo was a big mess that needed the Carol treatment.

Bartz, of course, did not stress that as much today. After all, Yang was sitting right in front of her.

Bartz noted that she has been asked about two things since coming on board:

What about a deal with Microsoft? And what the heck is Yahoo anyway?

She had nothing to say about Microsoft (MSFT) and said it would be said publicly only after any such deal was struck.

Actually, she has commented about talks with the software giant publicly many times, but let’s overlook that.

The Bartz went into the definition of Yahoo. It’s simple, she said. The largest global online media company. With technology. That everyone knows. Plus email.

10:34 am: Bartz ran through the new staff she has put in place, such as CMO Elisa Steele and others.

She then moved onto the top-to-bottom reviews she has been doing of Yahoo.

Including what she dubbed “space debris,” which are Yahoo sites that should be shut down, repaired or outsourced.

Bartz’s tone? Calm and comforting and reassuring–less the live wire she usually telegraphs and more the I’m-in-charge-here-so-remain-calm vibe.

She hit all the big targets, for good measure. Front page. Mobile. And, of course, advertising.

“Yahoo has a distinct opportunity in this area,” said Bartz, referring to its online display ad business. “Advertisers come to us.”

She ended by calling Yahoo a “home,” which is one theme the company is considering using as a brand strategy in an massive overhaul it is working on.

10:45 am: The floor was open for questions.

The first was a good one. Essentially, why is Google (GOOG) such a money machine when Yahoo is not? And why are its workers so much more productive in comparison?

“We have a very different model than Google,” said Bartz. “It has a cleaner process.”

As in, it is better at vacuuming up the dough!

Bartz, who has been trying mightily to end the Yahoo/Google comparison (smart move!), did not really give an answer.

“Please, this direct comparison model to Google is not fair and is frankly not relevant,” she said.

Well, it is actually quite a bit fair and a lot relevant, but we shall also overlook that one too (for now).

10:49 am: A fan question about how it was good that Bartz has been taking the focus off of the Microsoft issue too.

He also liked that she said she would take piles of money from the software giant, though, in a search partnership deal.

Then, the questioner dived right into the weeds, with questions about the front page, such as having too much dopey entertainment news on it.

Especially all that Jon & Kate and their gazillion kids crap!

This is a favorite meme for Bartz, who proceeded to quickly one-up the question by strafing a perfect celebrity target.

“If I see another Britney Spears item, I am going to throw up,” she declared in nauseous solidarity.

She then mentioned something called a “fluffometer,” which is apparently taking care of this most pressing issue of our time–the Lindsay Lohan threat.

Will it defluff Yahoo?

Inquiring minds want to know.

10:54 am: The inevitable China question was asked, of course, a query which has always tripped up previous Yahoo management.

“It’s very easy to get crosswise,” said Bartz, trying not to get crosswise.

She mentioned a recent human rights summit Yahoo had hosted. “We have actually done a lot, but it is never enough.”

Well, actually, Yahoo and many others did not do enough previously, but Bartz was pretty much steering clear of the thorny realities of doing business in China.

Then came the “vision” question.

Actually, Bartz said it was not about vision, but about growth. “We don’t have a vision problem, we have an execution problem,” she said.

Another question was asked about Internet censorship in China.

“I’m going to go real simple here: Yahoo was not incorporated to fix China,” she said. “It’s that simple.”

Bartz said the company was not going to take on every government in the world and that its “mistake”–referring to activists jailed due to Yahoo handing over information to the Chinese government–should not hound it forever.

Well, it should, but point taken.

The next question was about Iran and how popular Twitter is. Bartz said Yahoo was also in there.

11:04 am: A questioner asked about Facebook and why the social networking site was so popular, even though Yahoo had better products.

Bartz said Yahoo was working hard on making those products more social.

The next questioner asked about whether another Google partnership deal with Yahoo could be reborn. That deal went down in defeat last year.

“Justice is Justice,” said Bartz, referring to the federal government department’s opposition to the deal.

As in, you don’t tug on Superman’s cape, you don’t spit into the wind, you don’t pull the mask off the old Lone Ranger and you don’t mess around with Uncle Sam.

The next questioner asked about why Yahoo always told shareholders at meetings like this that it was doing great every year and then didn’t deliver.

Bear with us, said Bartz.

As to selling off its Alibaba assets in China: Not a good time to sell.

11:09 am: A questioner asked whether Yahoo might buy a newspaper, like the New York Times (NYT).

Yes, that would be a good move–out of the frying pan into the fire!

I was sitting right next to one of its reporters, Miguel Helft. No comment!

Bartz then thanked the Yahoo shareholders for having faith.

As I said, it was Bartz’s first annual meeting. But, for Yahoo investors over the last several years, having a lot of faith–too often tested–kind of comes with the territory.

Let’s be honest–even with the sassy stylings of CEO Carol Bartz, who will be appearing at her first Yahoo annual meeting this morning, there are few of these affairs that are even remotely exciting.

Last year’s Yahoo meeting did have a frisson of possibility, since billionaire investor Carl Icahn and Microsoft (MSFT) CEO Steve Ballmer were fixing to put the double squeeze on the board and, especially, its then-CEO and co-founder, Jerry Yang. Also, major Yahoo (YHOO) shareholders threatened a revolt.

But, no. In the end, Carl gave in and took a Yahoo directorship, Microsoft wandered off in a corporate huff and Yang and the board managed to get dinged by angry investors, but not donged.

This year, the stock has improved, hovering in the $15 a share range, although it is still pretty moribund.

“I am too tired of Yahoo stock to be angry any more,” said one major shareholder. “It is just wait-and-see what Bartz will do now for a lot of us.”

This year, most of the same 12-member board, now including Bartz, is up for reelection and it is unlikely they will get even a bad grade. Yahoo will also ask for approval of its accounting firm (yaaaaawn).

As to other stuff going on in the ballroom of the Santa Clara Marriott–yes, it is that boring!–in Silicon Valley, there are several important votes before the shareholders tomorrow.

One is a standard proposal regarding executive compensation or a “say on pay” proposal, which will be introduced by an outside stockholder.

Yahoo’s board is recommending against it, natch, because it would apparently be a horror show if actual owners of a company got to weigh in on what execs are paid in a significant way.

Another proposal, put forward by the company and thought of internally as an uphill battle, regards changes to be made to a 1995 stock plan and to a 1996 employee stock purchase plan.

The latter is most important, a request to authorize more shares for future employee options grants, which will be a large addition to the pool–30 million more shares–if authorized. The stock will be used to keep valuable Yahoo talent in place.

Frankly, with departures continuing, Yahoo could use the share ammo.

Lastly, you can read all the good stuff–like about salaries and bonuses, deserved or, more typically, otherwise–in Yahoo’s proxy statements here.

BoomTown will begin liveblogging the annual meeting at 10 am PDT, after doubtlessly enjoying a lovely Yahoo-sanctioned breakfast pastry.

In the past, Yahoo has used killer lasers and giant afros and has even tried a dog rising from the dead to brand itself.

Also, of course, there was the yodeler.

That was in 2003, in a clever television commercial that featured Yahoo’s famous sound, as rendered by yodeling champ Taylor Marie Ware (by the way, if you click on the exclamation point on Yahoo’s homepage, it still emits an annoying male yodel).

Now, in what many sources at the company said is a major push, Yahoo (YHOO) is working on a massive plan to overhaul its brand in order to repair a damaged public image and focus consumers on what defines Yahoo.

The effort is being spearheaded by newly installed Chief Marketing Officer Elisa Steele.

To take on the task, she has hired both well-known brand consulting firm Landor Associates and an outside consultant named Penny Baldwin, who was a former top exec at brand and ad giant Young & Rubicam.

Yahoo had formerly been using Ogilvy & Mather and Siegel+Gale to work on strategic branding issues. Ogilvy is still working with Yahoo, sources said, but it is unclear if Siegel+Gale remains in the mix.

The new branding of Yahoo, said several people close to the situation, might be built around the latest relaunch of its main homepage design.

The important front-page redo had been delayed by CEO Carol Bartz when she took over in January and is now slated for the fall.

Many themes have been considered to depict Yahoo in the future, many along the lines of Yahoo still being a key hub destination for Internet users.

Those possible directions were discussed at a recent off-site meeting of Yahoo’s top execs, led by Steele, who ran through the tangled history of Yahoo’s marketing efforts and showed off some rough ideas for the future.

One motto considered, among several: Yahoo as “your home on the Web.”

Whether it is going to be a sweet home or not is unclear, and does depend on exactly how much Yahoo is prepared to spend on this rebranding effort.

Microsoft (MSFT), for example, is in the midst of a $100 million marketing campaign around the recent relaunch of its Bing search service.

And Google (GOOG) has a brand that hardly needs any introduction–and on which it has spent very little marketing money–in that its name has become the verb that means “search” on the Web for most consumers.

Yahoo’s branding campaign will certainly have to be a big deal, given that it is one of the top Internet sites in the world and has massive name recognition.

And Bartz has been vocal about the importance of touting Yahoo as a well-known brand, even as she has said a lot internally and externally that she detests purple.

(That has long been Yahoo’s main color and also mantra, as in “bleed purple.”)

In an onstage interview with me at the seventh D: All Things Digital conference in late May, I asked Bartz about the image of Yahoo being broken and how she would change that perception and revive its innovative spirit.

“The best way to change the perception is to do a good job and then talk about it,” she answered at D7. “We just have to get our story out there; we have to continue to appeal to the people that come to us, and frankly, at some point people get sick of having us as the underdog and say, ‘Thank God, Yahoo’s back.’”

Well, that could depend on how well its upcoming branding campaign works or not, which must also be based on the product and business strategy Bartz settles on in her rejiggering of Yahoo.

Tomorrow morning, Bartz will preside, along with Yahoo Chairman Roy Bostock, at its annual meeting in Silicon Valley, although it is doubtful she will unveil any grand plan then for marketing or other major company strategies.

So, until the branding plans are unveiled, here are some of the more memorable Yahoo advertising efforts.

Yodel:

Lazarus the Dog:

Killer Laser:

Afro-tastic:

Odd Advice-giving Canadian Yahoo Creature:

[Belly Yodel photo courtesy of Yodel Anecdotal on Flickr]

In exactly one week at 10 am PDT, Yahoo will hold its annual meeting in Silicon Valley, the first time when new CEO Carol Bartz will greet its shareholders in person.

She should prep carefully, as the event has been quite a drama over the last two years.

In 2007, former Yahoo CEO Terry Semel left the company just days after a fractious annual meeting and was replaced by co-founder Jerry Yang.

And last August, the meeting was held in the midst of even more trouble.

The walk-up to that gathering included a failed takeover attempt by Microsoft (MSFT), extensive Yahoo (YHOO) management turmoil and a high-profile proxy fight waged by billionaire investor Carl Icahn.

And the meeting itself was also a mess, after shareholder voting was miscounted and it turned out that discontent about leadership was double what Yahoo first reported it was.

Broadridge Financial Solutions’ corrected tabulation of the vote on Aug. 1, without the “truncation errors,” showed Yang’s disapproval more than double what was previously reported, rising from 14.6 percent votes withheld to 33.7 percent. Yahoo Chairman Roy Bostock saw his shares withheld rise from 20.5 percent to 39.6 percent.

Yang later stepped down, as did President Sue Decker, both of whom presided over the meeting. Yang was replaced by Bartz early this year.

But most of the Yahoo board remains in place, with the addition of Icahn, including Bostock.

And today, just as it was then, Yahoo and Microsoft remain engaged in an ongoing push-me-pull-you relationship about whether to partner in search and online advertising or not.

Talks have been on-again-off-again for months now, including a meeting between Bartz and Microsoft CEO Steve Ballmer at the D: All Things Digital conference in late May.

Those talks have now appeared to reach yet another impasse, but that could change again quickly.

Sources at Microsoft said the software giant has remained interested in such a deal, although not at any price, a stance that has recently been made firmer by the apparent early success of its rehaul of its search offering, now called Bing.

Some inside the company think this puts added pressure on Yahoo to do a deal, before Microsoft actually logs in consistent gains in search share.

Microsoft has long been mired in third place at around eight percent, behind Yahoo by a dozen points and well behind Google (GOOG), which consistently tracks above 60 and 70 percent.

“Bing’s success only increases the odds [of a Yahoo deal] and decreases the price,” said one observer.

But a big price is exactly what Yahoo wants, with Bartz stating in an onstage interview with me at D7 that she was willing to do a deal for “boatloads of money,” as well as the right technology and data.

(You can see a video of Bartz’s full session here, talking about that and more.)

And she is backed, at this point, by the board, except for Icahn, who has been aggressively agitating for a Microsoft deal, in hopes it will return his huge investment in Yahoo into the black.

“He has been kind of driving Carol crazy about it,” said one source close to the situation.

For her part, Bartz has told many at the company and outside it that she was hired to make such key decisions and if the board–especially Icahn–did not like it they could find another CEO.

Yahoo has been upgraded recently by some analysts, based on confidence in Bartz’s ability to turn around and reinvigorate the company. The stock has seen a small bump up too.

But Bartz, although successfully projecting command of Yahoo and stabilizing the management over the last six months, has yet to put forth a detailed strategy for the company to stanch declines in profits and revenues and increase innovation.

And, although annual meetings are usually painfully scripted affairs, the event might be her chance to perhaps articulate that plan and more.

BoomTown will, of course, be front and center at the ongoing show to see what happens next.

Until then, here are two videos I did at the 2007 and 2008 annual meetings.

And below it, the great Barbra Streisand in a video, singing the classic, “Send in the Clowns”–which is pretty much the perfect theme song for the star-crossed Microsoft and Yahoo relationship.

2007:

2008:

]]> http://allthingsd.com/20090618/the-yahoo-annual-meeting-circus-rolls-back-into-town-next-week-send-in-the-clowns/feed/ 4 http://allthingsd.com/20090225/ibored-apples-shareholder-meeting-2/ http://allthingsd.com/20090225/ibored-apples-shareholder-meeting-2/#comments Wed, 25 Feb 2009 22:49:47 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=13646

]]> http://allthingsd.com/20090225/ibored-apples-shareholder-meeting-2/feed/ 0 http://allthingsd.com/20090225/ibored-apples-shareholder-meeting/ http://allthingsd.com/20090225/ibored-apples-shareholder-meeting/#comments Wed, 25 Feb 2009 22:49:47 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=13646

]]> http://allthingsd.com/20090225/ibored-apples-shareholder-meeting/feed/ 0 http://allthingsd.com/20090225/qotd-103/ http://allthingsd.com/20090225/qotd-103/#comments Wed, 25 Feb 2009 21:43:30 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=13625 Aside from a spontaneous “Happy Birthday” sung to an absent CEO Steve Jobs, Apple’s annual meeting today was something of a nonevent. Shareholders re-elected the company’s board of directors despite concerns about its handling of the disclosure of Jobs’s health problems. And the board continued to wave off questions about the company’s succession plans and Jobs’s well-being. Asked whether Jobs will return to work on schedule, Genentech (DNA) CEO and Apple (AAPL) board member Arthur Levinson said simply, “Nothing has changed.” Presumably, then, Jobs is expected to return to the company’s helm in June as planned.

Beyond that, there is little else to report. To wit, this first-hand account of the event posted to the Apple Insider forums:

There’s really nothing ‘material’ to report–even the usual gadflies (especially Mr. Ehrlich, the dude who disses Al Gore, the unions, and ‘socialist’ shareholders) trotted out the same old stuff.

The big event seemed to be the motley crew’s rendition of Happy Birthday to the absent CEO S. Jobs. The tenor was slightly different in that non-executive members-of-the-board (Levinson & Campbell) fielded questions at the behest of Tim Cook.

To me, the fact that few, if any, analyst-style financial questions were proffered shows that shareholders have little to wonder about the business of the juggernaut. This year, there was no barrage of product strategy questions by the likes of Prince McLean, which never really get addressed, per regulation FD and Apple policy, except enigmatically by Steve.”

]]> http://allthingsd.com/20090225/qotd-103/feed/ 0 http://allthingsd.com/20081219/siri-2/ http://allthingsd.com/20081219/siri-2/#comments Fri, 19 Dec 2008 17:04:23 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=10011

David Faber: The stock price is very low.

Sirius XM CEO Mel Karmazin: It sucks.”

– Mel Karmazin states the obvious in a July 2008 interview with CNBC

At Sirius XM’s (SIRI) annual meeting Thursday, shareholders approved a reverse stock split plan that empowers the board to split common Sirius shares by a 1-for-10 to 1-for-50 ratio by end of 2009. They also approved the issuance of up to 3.5 billion new shares. Should Sirius need to, it can now effect a reverse split that will raise its stock price above the $1 necessary to avoid delisting and sell new shares to meet the almost $1 billion in loan repayments it faces next year.

Sounds like a reasonable plan on the face of things. Trouble is Sirius is trading at around $.14. And at that anemic price, proceeds from a sale of 3.5 billion new shares would amount to just $490 million–less than half the amount of the debt coming due next year. Sirius clearly hopes it won’t have to issue all 3.5 billion shares the vote approved. To do so would dilute existing holdings and drag its share price still deeper into the mud. It would, however, keep the company in business–in the short term. Sirius’s long-term viability is another problem entirely, one that’s not easily solved. With an almost $5 billion loss in its last quarter, subscriber growth plateauing, and the U.S. auto industry–a major source of new Sirius sales–in decline, the satellite radio provider really needs to do something to shore up its ailing business. And its plans to drive subscriber growth, outlined in the second slide below, may not be enough to do it.

PREVIOUSLY:

• Your Report Card Is Your Stock Price? Guess Sirius Is Making Straight $.13’s…
• Save Sirius Coalition Having Trouble Saving Sirius
• Karmazin: Ask Not What Sirius Can Do for You; Ask What You Can Do for Sirius
• Trade You 77 shares of SIRI for 1 Month of “Sirius Everything”
• Sirius CEO: This Sucks

]]> http://allthingsd.com/20081219/siri-2/feed/ 2 http://allthingsd.com/20081219/siri-2-2/ http://allthingsd.com/20081219/siri-2-2/#comments Fri, 19 Dec 2008 17:04:23 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=10011

David Faber: The stock price is very low.

Sirius XM CEO Mel Karmazin: It sucks.”

– Mel Karmazin states the obvious in a July 2008 interview with CNBC

At Sirius XM’s (SIRI) annual meeting Thursday, shareholders approved a reverse stock split plan that empowers the board to split common Sirius shares by a 1-for-10 to 1-for-50 ratio by end of 2009. They also approved the issuance of up to 3.5 billion new shares. Should Sirius need to, it can now effect a reverse split that will raise its stock price above the $1 necessary to avoid delisting and sell new shares to meet the almost $1 billion in loan repayments it faces next year.

Sounds like a reasonable plan on the face of things. Trouble is Sirius is trading at around $.14. And at that anemic price, proceeds from a sale of 3.5 billion new shares would amount to just $490 million–less than half the amount of the debt coming due next year. Sirius clearly hopes it won’t have to issue all 3.5 billion shares the vote approved. To do so would dilute existing holdings and drag its share price still deeper into the mud. It would, however, keep the company in business–in the short term. Sirius’s long-term viability is another problem entirely, one that’s not easily solved. With an almost $5 billion loss in its last quarter, subscriber growth plateauing, and the U.S. auto industry–a major source of new Sirius sales–in decline, the satellite radio provider really needs to do something to shore up its ailing business. And its plans to drive subscriber growth, outlined in the second slide below, may not be enough to do it.

PREVIOUSLY:

• Your Report Card Is Your Stock Price? Guess Sirius Is Making Straight $.13’s…
• Save Sirius Coalition Having Trouble Saving Sirius
• Karmazin: Ask Not What Sirius Can Do for You; Ask What You Can Do for Sirius
• Trade You 77 shares of SIRI for 1 Month of “Sirius Everything”
• Sirius CEO: This Sucks

]]> http://allthingsd.com/20081219/siri-2-2/feed/ 0 http://allthingsd.com/20080812/well-that-was-36-million-well-spent/ http://allthingsd.com/20080812/well-that-was-36-million-well-spent/#comments Tue, 12 Aug 2008 12:37:41 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=3110 $36 million. That’s what Yahoo spent in the first half of 2008 for outside counsel on Microsoft’s (MSFT) unsolicited takeover offer and the debacle that followed. “We incurred incremental costs of $36 million primarily for outside advisers related to Microsoft’s proposals to acquire all or a part of the Company, other strategic alternatives, the recently resolved proxy contest, and related litigation defense costs,” Yahoo disclosed in a recent filing with the Securities and Exchange Commission.

$36 million. That’s quite a sum, and one that doesn’t even begin to reflect costs in employee attrition, shareholder confidence and other intangibles–Carl Icahn voodoo dolls, company founder cognitive therapy, etc. $36 million to fumble a deal that would have put a premium of more than 62 percent on the share price of a floundering Internet pioneer. $36 million spent on advisory services for an acquisition deal that was well within reach, but never consummated.

$36 million to walk away from $47.5 billion. And we haven’t yet seen costs for July and Yahoo’s (YHOO) annual meeting. That should set the company back another million in uneaten pastry alone.

]]> http://allthingsd.com/20080812/well-that-was-36-million-well-spent/feed/ 0 http://allthingsd.com/20080806/microsoft-inevitably-weighs-in-on-the-yahoo-shareholder-vote-miscount/ http://allthingsd.com/20080806/microsoft-inevitably-weighs-in-on-the-yahoo-shareholder-vote-miscount/#comments Wed, 06 Aug 2008 07:08:01 +0000 Kara Swisher http://kara.allthingsd.com/?p=2510

Yesterday–in a patented playbook move–some top Microsoft execs didn’t miss a chance to slap around Yahoo over its shareholder vote debacle, letting it be known to industry insiders (on the very loud QT, of course) that the Internet company knew full well that its biggest investor, Capital Research & Management, was going to vote a large number of shares against it.

Thus, it was just a hop, skip and a leak before their sentiments got hand-delivered to the doorstep of BoomTown HQ.

In essence, Microsofties are arguing that knowledge of a major investor’s dissatisfaction should have prompted Yahoo (YHOO) to question its unusually positive voting results at its annual meeting on Friday and ask the outside voting tabulator to recheck its numbers before officially releasing them.

As it turned out, the tally by Broadside Financial Solutions, an outside firm that conducts the tabulating for investors, was highly inaccurate related to the number of shares withheld by investors for particular board members.

As reported Friday, for example, Yahoo CEO Jerry Yang only had 14.6 percent of shareholder votes withheld, with 85.4 percent voting for him, which was better than the year before.

The new results saw Yang’s disapproval more than double what was previously reported, rising to 33.7 percent.

This huge delta was due to errors in counting the no votes from funds owned by Capital Research, which holds an overall stake of about 17 percent in Yahoo.

“They had to see the discrepancies,” said one source close to Microsoft’s (MSFT) thinking. “Yahoo was hoping no one would notice.”

While BoomTown is careful to consider the sources here–the collapse of Microsoft’s takeover bid for Yahoo has left quite a bit of acrimony between the pair–they actually might have a point.

Sources at Capital Research certainly agree, saying they unequivocally told Yahoo leadership that they were going to withhold a substantial number of votes from certain members of the company’s board.

Those targeted included Yahoo CEO Jerry Yang and Chairman Roy Bostock (pictured here), as well as several other board members.

“They knew our intention,” said one source at Capital, referring the many news stories about, in particular, the disgruntlement of Capital Research Global Investors fund head Gordon Crawford. “Everyone knew.”

Capital Research Global Investors–one of two funds separately managed at Capital Research–owns 6.5 percent of Yahoo, according to recent filings, and its Capital World Investors fund owns 9.8 percent.

As this column previously reported, Capital Research’s proxy committees had recommended to its various funds that they withhold votes from Yahoo leadership.

But sources familiar with Yahoo’s thinking said that while the company was surprised by the better-than-expected vote last Friday announced after the meeting.

They noted that while opposition was a “little light,” Yahoo could not tell exactly which votes came from where.

Yahoo sources acknowledged that while the company was well aware of the unhappiness from Capital Research, they received no definitive communication–such as a letter–outlining its exact voting intent.

They also assert that Capital Research’s many custodians who handled the voting for the investment giant’s many funds made have made the voting more difficult to parse.

In addition, Yahoo sources said that Capital Research waited until late in the week to vote, which also added to the confusion.

The new correct vote did not impact the re-election of Yahoo’s current directors, although the much lower numbers for leaders like Yang and Bostock are a significant sign that they are actually operating from a much weaker position.

It is a weakness that a company like Microsoft, as well as other critics calling for Yang and Bostock’s ouster, could take advantage of in the coming months, especially if Yahoo stumbles in any way.

In any case, Yahoo was not at fault for the tabulating errors made by Broadridge, mistakes which were corrected today.

Sources at Yahoo said the company did not think there were problems until Capital Research called Yahoo and Broadridge about problems in the vote.

“We double-checked their results,” said a source close to Yahoo about the wrong numbers the company received from Broadridge Friday. “But mistakes got made.”

That, in fact, is the definitive understatement of this whole mess.

]]> http://allthingsd.com/20080806/microsoft-inevitably-weighs-in-on-the-yahoo-shareholder-vote-miscount/feed/ 1 http://allthingsd.com/20080805/the-yahoo-shareholder-vote-like-florida-except-more-confusing/ http://allthingsd.com/20080805/the-yahoo-shareholder-vote-like-florida-except-more-confusing/#comments Tue, 05 Aug 2008 13:50:33 +0000 Kara Swisher http://kara.allthingsd.com/?p=2503

All Yahoo needs now is for former Florida Secretary of State Katherine Harris to show up and start recounting votes.

It could happen, given all the crazy characters who have been drawn to the much-beleaguered Internet company like a magnet, in 2008.

It’s almost as if there is a voodoo curse on Yahoo (YHOO).

So, you didn’t think the digital gods would let it have more than one weekend of good news, did you?

No, they will not, it seems.

After the annual meeting last Friday, which went off without a hitch and, more importantly, without an expected major shareholder vote against the company’s management and board, you could feel a palpable easing of tension among Yahoo leadership and its exhausted PR team.

By Monday, the Yahoo shareholder kerfuffle–in essence, one major shareholder of Yahoo has asked for its outside tabulator of investor votes at the annual meeting for a recount–had landed with a thud.

The problem is how shares were tallied in the Yahoo annual meeting, specifically around whether a group of votes withheld by Capital Research Global Investors was not counted, counted incorrectly or even voted incorrectly by the investor.

Parent company Capital Research & Management confirmed that it had asked Broadridge Financial Solutions, a Lake Success, N.Y.-based financial services company that does securities clearing and processing, to investigate whether those votes were correctly counted on behalf of its Capital Research Global Investors fund.

Capital Research Global Investors–one of two funds separately managed at Capital Research & Management–owns 6.5 percent of Yahoo, according to recent filings, and Capital World Investors owns 9.8 percent.

Capital Research Global Investors is run by legendary media investor Gordon Crawford (pictured here), who has become disenchanted with Yahoo over the last year.

Because of that, sources close to the fund’s thinking said Crawford had recommended that the fund withhold votes from CEO Jerry Yang and some other board members.

It’s not clear whether that actually happened or, if it did, whether the votes were tallied properly.

That’s because Yang, for example, only had 14.6 percent withheld, with 85.4 percent voting for him.

The votes withheld seemed low to Capital, considering Crawford’s large stake and how many shareholders have been deeply unhappy with Yahoo management this year.

Instead, overall results for Yang and the Yahoo board were mostly better than last year.

Everyone is investigating, of course–from Capital Research to Broadridge to Yahoo, which does not do its own tabulation, although it has hired an outside proxy solicitor to manage the process–to try to find out what’s what.

It is likely there’s a nonsinister reason for the voting results.

And there might be a lot of possible explanations, but I am partial to blaming the confusion that followed after activist investor Carl Icahn pulled his proxy fight a week before the meeting and made nice with Yahoo.

Unfortunately, Icahn’s golden proxy ballot was already in the hands of investors, many of whom might have voted for it and then had that vote essentially voided.

Wrote one BoomTown reader and Yahoo shareholder:

“I hold 23,000 shares of YHOO. I had 17,000 on the date of record. I voted to ‘withhold all’ … I think twice. Then I voted for all of Carl’s team. Now I have learned that the Carl votes did not count and a day AFTER the annual meeting I received my new ballot. I wonder how many other people were disenfranchised??? Who can I complain to?? Is this how Jerry got his support??”

Another commenter on the site also wrote:

“As a stockholder, I was curious *which* of my proxy letters actually was counted–I received four. One was from Icahn, the other three were from Yahoo. The last of which arrived today, August 4th. Does this strike anyone as odd?”

Actually, Yahoo’s twisting journey passed odd a long time ago and is now headed toward “The X-Files” territory.

(So let’s all triple-hope Yang’s upcoming trip to China for the Olympics goes smoothly. Have a good time, Jerry, we’ll be back here counting!)

]]> http://allthingsd.com/20080805/the-yahoo-shareholder-vote-like-florida-except-more-confusing/feed/ 2 http://allthingsd.com/20080804/yahoo-shareholder-vote-number-crunching-whither-cap-res-no-vote/ http://allthingsd.com/20080804/yahoo-shareholder-vote-number-crunching-whither-cap-res-no-vote/#comments Mon, 04 Aug 2008 21:39:26 +0000 Kara Swisher http://kara.allthingsd.com/?p=2497

There is a mini-tempest brewing over how shares were tallied in the Yahoo annual meeting last Friday, specifically around whether a group of votes withheld by one of Yahoo’s major shareholders was not counted, counted incorrectly or even voted incorrectly by the investor.

According to sources close to the thinking at Capital Research & Management, the proxy committees for its two large funds that hold a significant stake in Yahoo (YHOO) recommended last week that they withhold votes specifically from CEO Jerry Yang and from various board members, such as Chairman Roy Bostock, to register disappointment with their performance.

Thus, the investment fund confirmed it had approached outside vote tabulator Broadridge Financial Solutions, a Lake Success, N.Y.-based financial services company that does securities clearing and processing, to investigate whether those votes were correctly counted on behalf of its Capital Research Global Investors fund.

Capital Research Global Investors–one of two funds separately managed at Capital Research & Management–owns 6.5 percent of Yahoo, according to recent filings, and Capital World Investors owns 9.8 percent.

Capital Research Global Investors’ investor Gordon Crawford has been vocal about his disappointment with Yang and the board at Yahoo.

And sources close to the fund’s thinking said Crawford recommended that it withhold votes from Yang and some other board members.

Capital World Investors has been less critical of Yahoo, but sources said it was also leaning toward voting at least some of its stake against the company’s leadership.

But Yang, for example, only had 14.6 percent withheld, with 85.4 percent voting for him. Bostock fared worse, grabbing only 79.5 percent of the yes vote, with 20.5 percent withheld.

That would mean, assuming a large part of Capital Research’s votes to withhold were counted, that only a few other investors voted against Yahoo.

This is highly unusual in a year when many shareholders have been deeply unhappy with its management.

But, in fact, overall results for both Yang and Bostock were actually better than last year.

I called Broadridge for comment and am awaiting a response.

Yahoo does not do its own tabulation, which must be done by a third party, although it has hired MacKenzie Partners as a proxy solicitor to manage the process.

Said a spokesman in response to my inquiry about the situation:

“The independent inspector of elections certified the results of the election and Yahoo! accurately announced those results. Yahoo! did not participate in the execution of the votes and was not a party to any errors which may have been made either by a voting institution or a proxy processing intermediary acting on behalf of banks, brokers and institutions.”

While the recommendations of the proxy committees at Capital Research are apparently not binding on some individual directors of smaller funds that make up the larger ones, they typically follow along with the overall decision from the top.

They might not have in this case, of course, or they might not have voted the shares at all, although it is also possible they could have voted incorrectly or that the votes were not tallied properly.

This is better than a hanging chad!

Another unusual issue around the voting: The amazing drop in the number of shares that were voted at all.

In 2008′s shareholder tally (see below for individual director numbers), only 75.8 percent, or 1,046,095,584 out of 1,381,008,701 possible share votes, were cast.

There were 1,205,435,371 votes cast in 2007 and 1,276,175,601 in 2006, a much higher percentage of overall votes.

Sources at Yahoo speculated that this could be due to the fact that most investors vote automatically in an uncontested election and were waiting for an outcome in the proxy fight between activist investor Carl Icahn and Yahoo.

After that issue was settled right before the annual meeting, though, some investors might not have even bothered to vote.

More to come, but here are the pertinent stats on the Yahoo vote as of Friday:

Roy J. Bostock (Shares for: 832,023,657/79.5 %; Shares Withheld: 214,071,927/20.5%)

Ronald W. Burkle (849,373,291/81.2%; 196,722,293/18.8%)

Eric Hippeau (948,862,579/90.7%; 97,233,005/9.3%)

Vyomesh Joshi (971,594,650/92.9%; 74,500,934/7.1%)

Arthur H. Kern (814,871,925/77.9%; 231,223,659 /22.1%)

Robert A. Kotick (967,044,818; 92.4%; 79,050,766/7.6%)

Mary Agnes Wilderotter (964,939,727/92.2%; 81,155,857/7.8%)

Gary L. Wilson (856,006,576/81.8%; 190,089,008/18.2%)

Jerry Yang (893,055,602/85.4%; 153,039,982/14.6%)

]]> http://allthingsd.com/20080804/yahoo-shareholder-vote-number-crunching-whither-cap-res-no-vote/feed/ 7 http://allthingsd.com/20080804/kara-visits-the-yahoo-annual-meeting/ http://allthingsd.com/20080804/kara-visits-the-yahoo-annual-meeting/#comments Mon, 04 Aug 2008 07:01:03 +0000 Kara Swisher http://kara.allthingsd.com/?p=2488

BoomTown was blogging so manically from the Yahoo annual meeting, which took place in San Jose on Friday, I plum forgot to load up the video I did there.

No video was allowed inside the meeting or anywhere near it, by the way. So rather than getting beaten senseless by the squads of purple-clad Yahoo (YHOO) minions of CEO Jerry Yang, I decided to pocket my Flip camera for part of it.

But, afterwards, I did a very interesting interview with shareholder activist Eric Jackson, who has been beating on Yahoo for awhile.

To no avail, for now. As it turned out, Yang and the Yahoo board sailed out of the meeting pretty much intact, despite all the hubbub of this past year, from the company’s weakened performance to the full-frontal bid attack by Microsoft (MSFT).

Here is the video (and apologies for saying “board” meeting in several places in the video, rather than “annual” meeting):

Also, here are my liveblogging posts from the meeting, in time order:

BoomTown Liveblogging From Yahoo Annual Meeting in San Jose!

Liveblogging From Yahoo Annual Meeting: Empty Chairs and No Power

Liveblogging From Yahoo Annual Meeting: Tim Koogle Returns!

Liveblogging From Yahoo Annual Meeting: Bostock Defends Microsoft Dealmaking (Or Lack Thereof)

Liveblogging From Yahoo Annual Meeting: Yangtastic!

Liveblogging From Yahoo Annual Meeting: Shareholder Q&A!

Yahoo Shareholder Vote: Old Board Stays Put (While AOL Makes Another Boneheaded Move!)

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