- The Washington Times - Saturday, August 2, 2008

SAN JOSE, Calif. | Yahoo Inc.’s board emerged largely unscathed from the Internet company’s annual meeting Friday as a subdued crowd of shareholders raised few questions about the directors’ rejection of Microsoft Corp.’s $47.5 billion takeover bid.

After Yahoo’s leadership spent more than an hour defending its handling of the now-withdrawn offer, the company fielded just nine questions from shareholders for about 35 minutes before abruptly adjourning the meeting.

Some shareholders expressed displeasure by opposing the re-election of Yahoo’s directors, but the resistance wasn’t as intense as last year, when three directors were rejected by more than 30 percent of the vote.

In this year’s balloting, only two directors — Chairman Roy Bostock and Arthur Kern — were opposed on ballots representing at least 20 percent of Yahoo shares. Yahoo Chief Executive Jerry Yang, who steered the Microsoft negotiations with Mr. Bostock, was approved by 85 percent of the votes cast.

Much of the drama was sucked from the meeting last month when Yahoo reached a truce with activist investor Carl Icahn, who had been waging a campaign to oust the company’s entire board for spurning the Microsoft bid.

Mr. Icahn will join Yahoo’s board next week and can’t criticize his fellow directors as part of a peace pact he made. He didn’t attend Friday’s meeting.

Yahoo will add two other Icahn-endorsed candidates to the board by Aug. 15. Former AOL CEO Jonathan Miller had been considered to be one of the leading candidates to fill the other seats, but he apparently will be precluded from doing so as part of a noncompete agreement that AOL’s owner, Time Warner Inc., plans to enforce.

The provisions preventing Mr. Miller from joining an AOL rival remain in effect through March, Time Warner spokesman Keith Cocozza said Friday.

Mr. Miller has been mentioned as a possible successor to Mr. Yang, who has been unable to boost the company’s market value during the first 13 months of his reign.

Only two of the roughly 125 shareholders at Friday’s meeting criticized the Microsoft negotiations. Two other shareholders said they were happy Yahoo didn’t sell to Microsoft.

The rest of the shareholder remarks covered a wide range of topics, including Yahoo’s human rights policies in China and the scarcity of women on its board.

Former Yahoo employee Martin Baker, who still owns 100 shares, was mostly upset that the company didn’t carve out more time for shareholder questions.

“It seemed like they were more interested in going to lunch than hearing from shareholders,” said Mr. Baker, a San Francisco resident. “I think they controlled things pretty well.”

Yahoo’s biggest challenge still lays ahead, given that its stock price is just slightly above where it stood six months ago when Microsoft first announced its unsolicited takeover offer.

The shares fell 9 cents Friday to $19.80, far below the $33 per share that Microsoft offered before withdrawing the bid after Mr. Yang sought more in early May.

Mr. Yang, who co-founded Yahoo 14 years ago, assured shareholders his management team is pursuing a turnaround plan in “a very deliberate and forceful manner.” He has promised to increase Yahoo’s net revenue by at least 25 percent in each of the next two years.

Mr. Bostock staunchly defended the board’s handling of the Microsoft negotiations, saying the directors met more than 30 times to discuss the bid as well as other ways to boost the company’s stock price.

“At no point did this board or management in any way ever resist Microsoft’s proposal,” Mr. Bostock told shareholders. “We proactively engaged with them and tried to reach a positive conclusion for shareholders.”

Microsoft asserted that “Yahoo is attempting to rewrite history yet again with statements that are not supported by the facts.”



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