Stage set for proxy drama
Yahoo-Starboard contest heats up,
The drama that is the coming proxy battle at Yahoo may take three months or more to play out.
With Yahoo’s annual meeting expected in late June — but no official date selected yet — preliminary proxy materials will likely be filed this month. After that, the clamor could increase between Yahoo and activist hedge fund Starboard Value, a shareholder that is looking to overthrow the current board and oust CEO Marissa Mayer.
After that, you can likely expect “some colorful, critical fight letters coming out concurrent with ... the final proxy statements getting cleared and sent out to Yahoo! stockholders,” said Bill Poudrier, president of The Proxy Advisory Group. He discussed the situation with USA TODAY on Monday after participating in a conference call Friday about Yahoo and the Starboard Value proxy battle with Robert Peck, Internet equity analyst at SunTrust Robinson Humphrey.
After preliminary proxy materials are filed, it typically takes three weeks to get the proxy certified, said Peck in a note to clients Monday. He expects an annual meeting to happen before late July because after that shareholders can sue for a meeting to be held. Yahoo held its last annual meeting June 24.
The company likely aims to schedule this year’s meeting within 30 days of last year’s meeting date because any later date opens up the potential for additional board nominations, Pou- drier says. However, the date could be pushed back to late summer if Yahoo is making progress toward a sale of its core business.
“They just don’t want to have people accuse them of stalling ... but let’s say they are making progress on the core asset front and they feel like there is going to be more and more positive things for shareholders that they think the market will recognize,” Poudrier said. “It may behoove them to delay a little bit.”
Assuming that the vote will attract about 75% participation, Poudrier estimated a vote amounting to 40% of total outstanding shares could win the proxy battle.
Poudrier stopped short of handicapping the fight. To take control of a public company’s board without paying a control premium, he said, is akin to “pitching a no-hitter.” However, Starboard Value and its CEO Jeff Smith have done so before in 2013 at Tessera Technologies and a year later at Darden Restaurants. Starboard also lost an AOL board proxy fight in 2012.
Starboard is “an elite activist hedge fund,” Poudrier said. “Even though they are only a 2% shareholder in this scenario they are to be taken seriously, and I think Yahoo is taking them that way.”
There’s also a good chance that Yahoo and Starboard could reach a resolution without a proxy vote, Poudrier said. “The great majority of proxy fights get settled prior to holding a vote, rather than risk an uncertain outcome.”
If no settlement is reached, Starboard has “a reasonable chance of winning the contest,” Peck said in a note last week.
However, a settlement could give Starboard enough board seats to “quickly be able to maximize value to shareholders,” he said.
In other Yahoo news, Sandy Gould, the company’s senior vice president for talent acquisition, announced Friday that he is leaving the company, making him the latest in many defections.