Saturday, January 27, 2007

Council of Institutional Investors' Coverage of 'Plan B'

The Council of Institutional Investors is is the premier U.S. shareowner-rights organization. It is a not-for-profit association of 130 public, labor, and corporate pension funds with assets exceeding $3 trillion.

Rosemary Lally edits their weekly newsletter ("Alert") to members on the current happenings in the corporate governance world. Last week, she covered our Yahoo! "Plan B" initiative. Here is the article.

Activist Shareowner at Yahoo! launches cutting-edge campaign using New Web Tools

One shareowner activist is using blogs, YouTube, and wikis to launch a cutting edge campaign to pressure Yahoo! to make changes that he believes will improve the company's slumping performance.

Eric Jackson, the CEO of a consulting firm and the creator of Breakout Performance, a blog that offers analysis of developments at Yahoo!, has his sites set on rallying enough Yahoo! investors via the Internet to pressure the company to adopt changes. Ultimately, the investor, who owns less than 1000 shares in Yahoo! himself, hopes to organize a huge bloc representing 10% of Yahoo! stock. "The company has 250 million registered users. If 10% of those purchased 50 shares and joined our group, we would easily hit our goal. There's nothing magical about 10%. However, it's large enough to give us a strong voice among shareholders," says Jackson on his website. So far, he reports that a collective ownership stake representing $2MM has signed on to support Plan B - a long way from his $3.9B target, based on Yahoo's $39B market cap. In the next phase, Jackson plans to enlist institutional investors. He says he has spoken to Barclays, Vanguard, T. Rowe Price, Legg Mason, and others with large ownership stakes in Yahoo! and they have promised to discuss the plan and respond. "I really want to get the collective wisdom of all investors to form the best plan to take to Yahoo!'s board and management," he says. In addition, Jackson acknowledges that rallying a block representing 10% of Yahoo! stock by contacting just individual investors would be a tough task.

Jackson has suggested changes in a Plan B that he presents in the form of a wiki, a platform that lets many users collaborate on an issue. The initial form of the plan included replacing CEO Terry Semel with CFO Susan Decker and consolidating overlapping divisions. Other components of the plan, which is still evolving under the wiki, include the following:

  • Restructuring the board immediately with more active outside directors who own stock they have purchased;
  • Introducing 10-year term limits for directors;
  • Setting up a special committee of the board to study and then articulate the company's vision/strategy and start executing it;
  • Stepping up the pace of the $3B stock repurchase plan announced in October 2006;
  • Beginning a modest cash divident immediately and;
  • Removing anti-takeover provisions that are not shareholder friendly.

"Once we finalize our Plan B, we will take it to Yahoo!'s board and management and suggest that they adopt the plan immediately; if they don't, we will use our ownership take in the company to effect change to Yahoo!'s board composition," Jackson declares on his blog.

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