Wednesday, January 09, 2008

One-Year Anniversary of "Plan B" for Yahoo!

One year and two days ago, I posted a "Plan B" for Yahoo! with a Youtube video of myself talking about it. A few days later, several people had pledged a couple of hundred thousand shares to the cause -- expressing their dissatisfaction with the direction of the company.

Because of the initial support, we soon launched a wiki of the "Plan B" so that supporters could help edit the plan, which included several suggestions for how to improve the company. A company I'd never heard of ( created a widget for supporters to instantly "pledge" their shares to our cause -- saving me the pain of writing down their share counts left in comments to an excel spreadsheet.

I met with Yahoo!'s General Counsel, Michael Callahan, in April at their Sunnyvale offices to discuss what our shareholder group wanted. I tried to run for the board (they blocked me). And our group also encouraged a strong "against" vote leading up to the June Annual Meeting (which I attended and confronted the board and management).

There was an extremely high "against" vote by shareholders at that meeting (36% "against" for some). Six days after the meeting, Yahoo!'s CEO, Terry Semel, stepped down.

One year later, did it matter?

Yes; not so much because of significant changes that have subsequently happened at Yahoo!, but because of what I hope the whole effort inspires in other small shareholders.

I hope the legacy of the Yahoo! "Plan B" campaign is that every shareowner counts and can make a difference if he/she decides to voice their opinion. There's one caveat to that. You can't just complain. Yahoo! Finance Message Boards are filled with comments from disgruntled investors who think management is terrible and should be replaced. That's not good enough, if you want to build a large group of like-minded investors. You have to be able to answer the question: "If you're so smart, what would you do if you were in charge." It doesn't have to be a perfect answer, but you need to have enough of an answer to engage a dialogue with others.

Engagement is the key word. As I have watched the lines of people forming to vote in New Hampshire and Iowa in these past two weeks, I thought of shareowners. A democracy is stronger when it is more vibrant with an engaged electorate -- no matter who is elected finally. Our capital markets are similarly stronger when they are made up of engaged shareowners willing to challenge management and directors when they don't understand some of the decisions made.

With the tools of the Internet, we have no excuse for not getting involved in speaking up when we don't like what's going on at companies in which we hold shares. On the other hand, it would be appreciated if the SEC could at least meet us half-way by providing more of an opportunity to have a spotlight on our opinions. The failure of the SEC to adopt more "shareholder access" friendly rules last year was a major disappointment. Hopefully, the winds of change will blow favorably on that issue in the year ahead.

Whatever happens, shareowner power will always remain in our hands. Let's use it.

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