SAN FRANCISCO (AP) — A major Yahoo Inc. shareholder is recruiting company co-founder Jerry Yang to join a crusade to oust Chairman Roy Bostock amid the upheaval triggered by the recent firing of CEO Carol Bartz.
The shareholder, hedge fund manager Daniel Loeb, sought Yang’s help in a letter sent Wednesday. The direct appeal to Yang, the longest-serving member of Yahoo’s board, is the latest twist in the melodrama that has been unfolding since Bostock called Bartz Sept. 6 to cut her loose with nearly 16 months left on a four-year contract that he awarded her in January 2009.
Since that brusque parting, Bartz has questioned Bostock’s manhood and blasted the Yahoo board as a bunch of “doofuses.” Loeb, who controls a 5.2 percent stake in Yahoo through his Third Point LLC fund, also launched his campaign to shake up a board that he views as an impediment to turning around one of the Internet’s best-known companies. Meanwhile, the board has engaged in a “strategic review” that has raised the possibility Yahoo might be broken up or sold in its entirety.
Loeb appears determined to get rid of Bostock, a polarizing figure among shareholders since he and Yang balked at an opportunity to sell the company to Microsoft Corp. for $47.5 billion, or $33 per share, in May 2008. That squandered opportunity has become increasingly frustrating for shareholders as Yahoo has been outmaneuvered by rivals Google Inc. and Facebook while its stock price has remained below $20 for nearly three years.
Yahoo shares gained 30 cents Wednesday to close at $14.55.
The sagging stock price has cost Yang, too, because he owns a 3.6 percent stake in Yahoo — a fact that Loeb played up in his letter.
“As a founder and major shareholder of the company, the abysmal record of the current leadership must be heart-rending to you personally, as well as damaging to your net worth,” Loeb wrote. “We urge you to do the right thing for all Yahoo shareholders and push for desperately-needed leadership change.”
Since becoming Yahoo’s chairman in early 2008, Bostock has worked closely with Yang, whose official title is “chief Yahoo.” Yang was Yahoo’s CEO during the first year of Bostock’s tenure as chairman, and they presented a unified front in the rebuff of Microsoft. They also agreed that the blunt Bartz was the right leader to succeed Yang as CEO, even though she had no previous experience running a company that relied on Internet advertising to make money.
An unconfirmed story published last week by the Business Insider blog reported that Yang has been feuding with Bostock recently and might try raise enough money to buy Yahoo, which currently has a market value of about $18 billion. Other media reports have said Yahoo’s board is evaluating whether it makes sense to sell the company before searching for a permanent CEO. Tim Morse, Yahoo’s chief financial officer, is running the company on an interim basis.
Bostock and Yang joined in a Monday telephone conversation with Loeb to discuss the recent turmoil at Yahoo, according to Securities and Exchange Commission documents filed Wednesday by Third Point. Bostock hung up after Loeb questioned his leadership and called him a major part of Yahoo’s problem, according to the filing.
Loeb reiterated the criticism in his letter to Yang, contending that Bostock is a “destroyer of value.” Loeb also said he had talked to enough “Silicon Valley cognoscenti” to conclude that Yahoo won’t be able to lure a top-notch CEO unless Bostock steps down.
A spokesman for Yahoo’s board declined to comment on Monday’s phone call with Loeb nor the letter to Yang. Instead, the spokesman referred to a statement the board issued last week after Loeb disclosed his demands for the resignations of Bostock and three other directors — Arthur Kern, Vyomesh Joshi and Susan James.
“The Yahoo board recognizes the critical challenges facing the company and appreciates constructive input from all shareholders,” the statement said. It also said the board welcomed a “dialogue” with Third Point. It’s unclear if Monday’s phone call would be the board’s only conversation with Loeb.
After spending $645 million to acquire the 5.2 percent stake in Yahoo, Loeb said he will seek the regulatory clearance to buy additional shares in the company.