Yahoo! Loses its Activist Director

Activist shareholders sometimes seek board positions.  Statistics show that the presence of a non-management director on the board can be beneficial to shareholders.  At the same time, however, the dissident directors may not need indefinite tenure.  This can be seen in connection with the behavior of Carl Icahn and his position on the board of Yahoo. 

Carl Icahn has been a regular advocate for shareholder rights and has sometimes used his economic strength to obtain positions on the board for himself or his nominees.  Microsoft’s failed attempt to acquire Yahoo! last year provided Mr. Icahn with an opportunity to take a position on Yahoo!’s board.  As reported in the Wall Street Journal, he gained a position after threatening a proxy fight.  A few weeks back, however, Mr. Icahn resigned from the Yahoo board, indicating that the board no longer needed an activist director. 

His tenure on the board saw a number of changes.  Jerry Yang stepped down as CEO, replaced by Carol Bartz, who has garnered considerable praise from Mr. Icahn.  (As he wrote, according to the Wall Street Journal:  “I wish you could be cloned because so many of the companies in the country could use a Carol Bartz as CEO.”).  Yahoo also entered a ten-year search partnership with Microsoft. 

With these changes in place, Mr. Icahn deemed his position on the board no longer necessary.  Perhaps the lesson from Mr. Icahn's approach is that boards can sometimes use a spirited outsider to shake up the existing culture and decision making process, if only for a short time.  

Comments

[Tomas Ligar]

A very interesting article! In 2008 Icahn's was considered one of the fifty richest men in the world. no wonder why...