Yahoo and dissident investor Carl Icahn have struck a last minute deal that avoids an all out revolt at the upcoming shareholder meeting in August. Icahn will get 3 seats on the new 11-person Board in return for not challenging the entire Yahoo slate of nominees. Late last week, Legg Mason manager Bill Miller had announced his support for the Yahoo board, reaffirming that institutional investors usually line up behind the existing team in a proxy fight, and all-but guaranteeing some kind of compromise between Yang and Icahn. In many proxy fights, these compromises are spearheaded by large institutional investors. Miller’s pronouncement may have been a shining example of such quiet diplomacy.
With this deal, it appears that Yahoo founder Jerry Yang has dodged a bullet and will retain his position with the Internet giant. In a statement, Yang said he is happy to “put the distraction of a proxy fight behind him.” For his part, Icahn still supports the possible sale of the company, but says he looks forward to working with the board to “help the company achieve its full potential.”
For Yang, the hard part isn’t over; it’s just begun. Icahn has made his position perfectly clear and Yang, in an effort to remain with the company, opted for the “half a loaf” position of avoiding a proxy fight but letting the fox all the way into the henhouse. Yang now has to perform, knowing the new board has 3 hostile members waiting for any misstep. Yang has bought some time but it’s a deal with the devil. The deal doesn’t put the “distraction” behind the company, it only guarantees more turbulent times ahead. It’s safe to assume that Icahn will take this time to get his ideas and people in place while he looks to make another run at Yahoo, if Yang can’t turn things around in a reasonable timeframe. In buying time with this deal Yang is betting he can indeed put Yahoo back on track, at least enough to blunt any opposition from Icahn, hoping he will tire of the effort and turn his attention to other pickings? The clock is ticking and time will tell. Analysis by Edgelings’ Robert Grove.
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