Yahoo!'s latest letter warns of letters
irritating lack of capitals ahead
Yahoo!'s chief executive, Jerry Yang, has written to his fellow yahoos telling them what to expect from the forthcoming proxy contest over the company's board of directors.
The email went to all Yahoo! staff and was filed with the Securities and Exchange Commission.
It first explains what a proxy contest is - when a shareholder proposes their own candidates to be elected to the board of directors instead of the slate proposed by the company's management.
The email warns: "it is typical for a variety of positive and negative statements to be made about a company’s board and management. we expect these kinds of statements about yahoo! to intensify in the weeks ahead." So far the battle has been waged almost entirely by letter and Yang said the company would respond to statements it regards as unfair or misleading by issuing press releases.
Icahn, who now owns some four per cent of Yahoo!, continues to demand Yahoo! sell itself to Microsoft and if that doesn't work do a search deal with Google. Icahn appears to see a deal with Google as a stepping-stone to an eventual Microsoft takeover. Apart from getting rid of Yang and the other directors he seems short on actual strategic plans for the company.
The latest epistle is here. ®
There are actually companies who issue non-voting shares. Google has issued shares which had a tenth of voting power of the original stock (the one owned by the founders). Many possibilities exist. For instance, preferred stock usually have no votes.
Loudmouth tries to bully his way
Part of the problem has been described above. Share (stake)holders with different investment goals. Some want to 'ride the wave to the top' and get off; while others want to 'ride the wave into shore'. IMHO, Icahn, is one of the former: MAXIMUM profit, NOW!!!
With his loud mouth, he is going to scream as loud as he can, and try to get his way. What will be interesting, will be the outcome of the stockholders meeting. If the stockholders turn him and his slate of directors DOWN, expect Icahn to ultimately sell. It will be too humiliating for him.
It will depend on how the individual stockholders view the long term prospects of Yahoo, and whether or not, they will get a better deal in the future.
Ha Ha Ha Ha Ha Ha Ha
Had to chuckle to myself about the loony toon above who reckons boards should draft company statutes such that shares are only given voting rights after 6, 9 or 12 months. What planet does this nugget come from? There are a few angles to come from on this, the first is that this type of scheme would be completely and wholly unmanageable. Under the effects of short selling, multiply listed fungible shares and the like, it would be next to impossible to track who had voting rights and who didn't. Also, what would qualify you for the time period? If I hold 1 million shares then receive another 100,000 in a stock split or rights issue, do my new 100,000 have voting rights or not?
The second point is that the value of shares would change once they accrued voting rights, so there would be a business for becoming a voting proxy. Basically holding shares for long enough to gain voting rights then selling on the rights to all price moves in the shares as well as the voting rights, but holding the shares themselves so that you retain the voting rights.
Finally, this proxy battle is exactly what Yahoo needs. Yahoo's board were negligent in rejecting the move from Microsoft since it massively overvalued both Yahoo's current value and its future potential value. Regardless of what happens here, Yahoo isn't going to achieve the sort of value Microsoft gave it, so the best thing for the shareholders (who own the company when all said and done) would have been to sell it to Microsoft. The only reason Yahoo didn't sell was because the board didn't like Microsoft - that's no good reason for a financial decision.
By the way as a final point, a 4% stake in a company is not small by any stretch of the imagination. Especially a company the size of Yahoo with a market cap over $36 billion.