Yahoo! Inc. is still reeling from the closure of several magazines that have been part of its stable for years, and it appears more troubles are on the way for Marissa Mayer & Co.
Activist investor Starboard Value LP is readying its war chest to kick up a proxy fight with Yahoo, probably because it isn’t satisfied with the recent restructuring and a promise to offload non-performing assets.
Lobby for Overhaul of Management Team
Companies such as Okapi render services to investors who wish to wage a potential proxy war.
Starboard, which owns less than 1 percent of Yahoo shares, is widely expected to lobby for the appointment of new board members as early as this month.
Starboard has been vocal in its push for management changes since 2014, claiming the current leadership team is devoid of ideas and therefore should pack up its bags and exit.
This places further pressure on Yahoo CEO Mayer, who is currently grappling with criticism over her inability to revive the underperforming Web company.
Yahoo is striving to define its niche, having lost out to Google in the race for top search engine, and registering poor performance in its news websites. The company is currently reliant on its stakes in Yahoo Japan Corp. and Alibaba Group Holding Ltd. to boost its balance sheet.
Mayer was quoted early this month as saying the board is reviewing strategic proposals and the available alternatives.
Last November, Starboard CEO Jeff Smith wrote a letter to Yahoo’s leadership team advising it to overhaul its leadership strategy. He stated that the “market has a dim view of the company’s current strategy, and selling the Core Business now is the best outcome for Yahoo shareholders”.
Smith finished off the letter by saying the Starboard will lobby for management and board changes should it “continue to make decisions that destroy shareholder value.”
Starboard now has a chance to actualize its threats: The period for nominating board members or submitting proposals for Yahoo’s annual shareholder meeting opens next week and will run for nearly a month.
Ms. Mayer has a lot to fear, as Starboard’s past history includes forcing executive changes in various companies such as Darden Restaurants Inc., and convincing Office Depot Inc. and Staples Inc. to merge.
Not the First Time..
Yahoo itself has had a share of proxy wars in the past. Recently, in 2012 Third Point LLC pushed for nomination of three board members, including its founder Dan Loeb into Yahoo’s board.
The proxy war also saw former CEO Scott Thompson resign and promptly replaced with Ms. Mayer.
Yahoo co-founder Jerry Yang also left as the CEO in 2008 after billionaire activist investor Carl Icahn threatened to brew a proxy fight after the company failed to agree to a buyout by Microsoft Corporation.