Yahoo has averted a potentially transformative battle with activist shareholder Starboard Value by appointing four new directors the hedge fund suggested. As a result, Starboard will drop its fight to replace the entire board.
“This constructive resolution will allow management and the board to keep our focus on our extremely important objectives,”Marissa Mayer, CEO of Yahoo, said in a statement. “Management is looking forward to working with the entire board, including the new directors, to maximize shareholder value.”
Last month, Starboard Value launched what’s known as a proxy fight, asking fellow shareholders to remove the current board and install its own slate of nine candidates. The hedge fund, which holds a 1.7 percent stake in the company, said a board overhaul “is desperately needed to hold management accountable” at the time.
Yahoo is in the middle of an auction that could sell off its core Internet business. Since CEO Marissa Mayer took the company’s helm in 2012, the one-time search giant has been under scrutiny to reinvent itself for the mobile age. But Mayer’s strategies, like pricey start-up takeovers, amped up news and video content, and a portfolio of new apps, haven’t translated to meaningful growth.
Wednesday, Yahoo said that Starboard’s CEO and chief investment officer Jeffrey C. Smith would be among those joining the board, as well as its Strategic Review Committee, which is overseeing the sale process.
“I am pleased that we were able to reach a constructive agreement with Yahoo to add new independent directors to the Yahoo Board,” Smith said. “We look forward to getting started right away and working closely with management and our fellow board members with the common goal of maximizing value for all shareholders.”
The remaining three new directors are investment banker Tor R. Braham; a former chief executive of the Tribune Publishing Company, Eddy W. Hartenstein; and veteran technology executive Richard S. Hill.
Yahoo said that at its annual meeting, two current directors will not stand for re-election, so that the board will ultimately have a total of 11 members.
“We are pleased to welcome these four new highly respected, independent directors to our board,” said Yahoo chairman Maynard Webb. “The additional board members will bring valuable experience and perspectives to Yahoo during this important time for our company.”