June promises to be an interesting month for Yahoo. The company filed it’s proxy statement yesterday, setting the date for its annual shareholder meeting on August 1. Activist shareholder Carl Icahn, who has already proposed his own alternate slate of board members, is now also calling for CEO Jerry Yang’s head.
Icahn points to a recently unsealed complaint in a shareholder lawsuit that details the lengths Yahoo has gone to squirrel the deal with Microsoft. (The complaint can be downloaded here). He tells the NYT:
I don’t think anybody ever understood the magnitude of what Yahoo did to do avoid making a deal, In my opinion, you might have to get rid of Jerry and part of the board to bring back Microsoft.
What particularly galls him is the employee retention plan Yahoo put into place after Microsoft made its bid, which could have ended up costing Microsoft as much as $2.1 billion if its $31-a-share bid had been accepted (the retention plan would have cost up to $2.4 billion at $35-a-share). Microsoft was willing to shell out $1.5 billion for the retention plan. (Another tidbit from the unsealed complaint, Microsoft had offered $40 a share for Yahoo in January, 2007, which then-CEO Terry Semel turned down). The annual shareholder meeting should be fun.
Icahn may want to get rid of Yang, but he is not going to find a less expensive CEO. According to Yahoo’s proxy filing, Jerry Yang’s salary in 2007 was only $1, and he received no other compensation (he does own 3.9 percent of the company, though). President Sue Decker’s salary alone was $658,000.
Although, it is not going to cost much to get rid of Yang either. His severance agreement in case of a change of ownership calls for him to get only $2. Sue Decker would get $1.6 million, plus an automatic acceleration of unvested equity and options worth another $6.7 million. If you add up the severance of the top five officers, including the value of accelerated options, it would come to almost $25 million.
Will Icahn’s sword rattling do him any good? Microsoft has already formally walked away from the deal. It almost surely would come back to the negotiating table if shareholder’s replaced Yahoo’s board, but it may no longer feel it needs to offer $31 a share if that happens. Can it happen? Icahn owns about 4 percent of Yahoo, and is buying up more (perhaps another 4 percent). He’s rallied support from corporate raider pals like T. Boone Pickens (who owns at least 10 million shares, just under 1 percent) and hedge fund investor John Paulson (who owns 50 million shares, which is another 4 percent). So that is only 9 to 13 percent of the voting shares so far.
Icahn needs to get Yahoo’s two largest shareholders on board: Gordon Crawford of Capital Research and Management and Bill Miller of Legg Mason. As of May 7, according to the proxy, Crawford controlled 16 percent of Yahoo’s shares and Miller controlled another 6.7 percent. Add all of that up, and that’s 32 to 36 percent of the shares—still not enough, but getting close. Yahoo insiders, including founders Yang and David Filo, control only 10 percent of the shares. (Click on the table below to see a larger image):
What’s your point here? Yang’s salary is $1, but he made a dumbass move costing the company $2.1B.
I’m sure Icahn would rather pay a CEO $10M that made a better decision than that.
Go a head??! Priceless
I am sure Icahn will WIN. No matter what.
Same thing happened with BEA / Oracle also. It was YES, NO and finally oracle bought them.
So get some Yahoo stock. No too late.
Cheers, Nag
WOW! I am very disappointed to hear shareholders kicking out founders of a company. I hope Jerry can rally Gordon Crawford of Capital Research and Management and Bill Miller of Legg Mason. I hear Google may come in sometime soon. Lets see how this unfolds.
What’s the old saying? “The most dangerous man is one with nothing to lose”?
Dude, get a proofreader. This post is full of incorrect use of apostrophes..
“the company filed it’s proxy statement” should be “its proxy statement”.
“if shareholder’s replaced Yahoo’s board” should be “shareholders replaced Yahoo’s board.”
Erick - I don’t think Icahn gives a flying flip about his salary. A salary is irrelveant relative to shareholder costs that have been as a result of an incompetent yahoo CEO.
This puts all of the recent Yahoo announcements (CBS deal, etc.) into a context. Management needs to quickly show evidence of a new strategy as an alternative to a MSFT buyout. Also interesting the $40/share on the table in the past, which explains why - at least through rumor - management was pushing for $37/share this time around.
This should serve as a lesson to entrepreneurs - if the dreams of striking it rich, if you do an IPO, you really no longer run the show. I’m a bit surprised Mr. Yang just won’t let go of his baby - Yahoo really isn’t what it used to be and there’s always the “next thing” to move onto.
I think that’s really cool or Jerry to only take $1 for working there.
He is a real coder!
It’s times like these you ask, whatever happened to David Filo. In 2006, David Filo was estimated to be worth $2.9 billion, ranking him the 240th richest person in the world. What salary did he take when he was chief Yahoo?
So, just a thought, I don’t think that Yang really cares about the $1 a year salary. What is he worth is the question. Didn’t Steve Jobs do the $1 a year thing too back in the day?
$1 a year…that explains his bad haircut.
They’re getting leadership commensurate with salary.
It is truly amazing that one can manage to live on $1 / year in this day and age. It must cost him around $50 just to fill up his gas tank every week. What about the costs of meals, rent etc? Jerry Yang is living proof that anyone can survive on the smallest amount of income provided he remains frugal in his spending. Bravo to Jerry.
Is anyone else still a fan of Yahoo!? I use it every day and am fairly satisfied. There seems to be a lot of Yahoo! bashing going on.
Look, when I was on the buy side and one of our stocks was involved in a takeover, we voted for management and then sold the stock. That was the easy thing to do.
All the mutual funds will vote for management - guaranteed. In fact, if it wasn’t a union account - who specifically directed us how to vote - some intern in the office would automatically vote all the shares for management.
We didn’t have enough time to go through all 500 companies in the portfolio and study all the shareholder proposals.
Ichan will get 35% of the vote and management will get 65% of the vote. Bank on it. That’s the reality. Ichan will be defeated. And he knows it. He will be selling the day of the vote.
Is it just me or does Jerry Yang look exactly like this kid on new Rainn Wilson’s movie “The Rocker” poster? check it out….
http://www.cinemablend.com/new.....-8848.html
Ya-Who?
$2 billion? Try $10 billion!!! That makes him one of the most expensive CEOs in history, imho…
http://snipr.com/2dp25 [mybackpagesbyjessefelder_blogspot_com]
Just so you know, its $1 year + perks, while likely add up to hundreds of thousands of dollars. All meals, vehicle, living expenses, etc are paid directly by Yahoo!, which is how he pulls it off. It is done purely for tax reasons.
Well, it looks like Jerry loves Yahoo! more than his salary and probably continue even if his salary decreased by 1$
Well, you do get what you pay for most of the time…
Granted Yahoo has been doing an okay job of turning themselves around since the deal went south, but key factor is time, Yahoo has done decently int he short run, but it remains to be seen if anything will happen in the long run.
And besides, even if they oust Yang, what makes Icahn think that Microsoft will all of the sudden be happy to fork over the original amount again? The best they can hope for is to restart the deal, albeit at a slight disadvantage this time.
Dude looks the idiot in that pic! LOL.
No wonder Terry Semel was reluctant to comment on the MSFT bid and Yang’s handling of it. He rejected a $40 bid?! That’s insane!
Yahoo seemed to be losing on the programming front to one of its old rivals - AOL has been coming up strong and bypassing Yahoo in many of the channels. One example is AOL’s Money & Finance Channel. You can check it out here - http://money.aol.com/.
The $1 salary is a scheme used by the greediest of the greedy. Take all of your pay in stock, pay the lowest possible capital gains tax on that stock and circumvent paying any income tax, social security tax or medicare tax.
Your mailman pays more into social security and medicare than this greedy billionaire.
Do you really think it’s about the $1 ?!!
Icahn will fry Yang. I’m putting my money on the raider. I’m not sure If he’ll get what he wants from Microsoft but it is obvious that Yang’s time as CEO is ticking and that there’s no rescue plan. Just stalling the moment untill someone more determined, like calm Carl here, takes the wheels and steers.
Is it me or Susan’s Decker salary (the highest) is incredibly low? 55,000 dollars a month isn’t such a big deal.
Stop blowing smoke up our ass, Arrington. We know you’re in Micro$oft’s pocket. Or should I say purse.
I think the big problem here is the people that are for the MSFT take over are shareholders who want to profit (who doesnt?) however yahoo is a really great company, they support open standards and open source. I’ve really been looking forward to seeing where they are taking the web (juku, searchmonkey, etc…) yahoo is one of the (many) reasons the web is where it is today, if you
remove it from the ecosystem what will happen?
Your post must be alluding to the “Future of Media” you recently spoke about, a future that apparently doesn’t include correct English.
In the meantime I suggest you review the rules for using the apostrophe. And the phrase is “saber rattling”.
In one year, I see Yang working a very large pant press machine.