Posted by: Catherine Holahan on August 5, 2008
Yahoo’s critics have long complained that Jerry Yang counted out Microsoft’s offer too soon. Now they say the firm it hired to tabulate shareholder votes simply can’t count.
On Aug. 5, Broadridge Financial Solutions, the company that tallied shareholder votes in favor of Yang & Co.’s reelection to the board, said it made a mistake. Instead of 85.4% approving Yang’s reelection, less than two-thirds supported him. The recount was requested by Yahoo’s largest shareholder, Capital Research Global Investors, on the belief that its decision to withhold votes in favor of Yang was not reflected in the initial results.
Fund manager Gordon Crawford had joined Icahn in harshly criticizing Yang’s handling of Microsoft’s takeover bid, which was once as high as $33-per-share. Now, with Icahn mired in his own takeover battle for his pharmaceutical firm ImClone, it seems Crawford has taken hold of the torch to oust Yang.
According to All Things Digital, which broke the story Aug. 5, sources close to the fund say Crawford had recommended withholding votes for Yang to express dissatisfaction with management. Capital, which holds 6.2% of Yahoo’s shares, believed other shareholders would follow suit. So fund employees were surprised when less than 15% of shareholders did not vote for Yang.
Capital Research asked Broadridge Financial Solutions to recount the votes sent on its behalf. Yahoo said that it had no role in any errors that were made.
Capital likely knew that a recount was unlikely to change the result of the elections. Yang was able to win over many shareholders in recent weeks with arguments that Icahn and others do not have a credible plan for running Yahoo aside from selling to Microsoft, which recently refused to submit another offer for the whole company.
So what was the point of the recount? Well, many analysts and investors still believe that a deal with Microsoft will create the most value for Yahoo shareholders. Yet, <
Microsoft CEO Steve Ballmer has expressed frustration in dealing with the current board and recently refused to offer another bid .
The lower numbers for Yang and chairman Roy Bostock emphasize that shareholders still don’t approve of how the Microsoft offer was handled. Thus, the recount telegraphs to Ballmer that, even if many of the same faces are around the negotiating table, those people lack the support to deal with Microsoft in the same manner.