Starboard launches proxy fight to remove entire Yahoo board

Thu Mar 24, 2016 5:18pm EDT
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By Michael Flaherty and Supantha Mukherjee

Activist hedge fund Starboard Value LP moved on Thursday to overthrow the entire board of Yahoo Inc (YHOO.O: Quote), including Chief Executive Marissa Mayer, who has struggled to turn around the company in her nearly four years at the helm.

Starboard, which has been pushing for changes at Yahoo since 2014 and owns about 1.7 percent of the company, said it would nominate nine candidates for the board.

The proxy fight comes as Yahoo is pressing ahead with an auction of its core Internet business, which includes search, mail and news sites. The faded Internet pioneer has been struggling to keep up with Alphabet Inc's (GOOGL.O: Quote) Google and Facebook Inc (FB.O: Quote) in the battle for online advertisers.

Yahoo said in a statement it will review Starboard's nominees and respond in due course.

Yahoo and Starboard could still come to an agreement before the company's annual meeting, expected to be in late June. If they cannot avoid a proxy fight and the Yahoo board election is taken to a shareholder vote, attention will swing to the large mutual and index funds that own the stock and will carry heavy weight in the final tally.

"We think everyone getting into the stock over the past six months, and most of those easing their way out, will all side with Starboard," said Don Bilson, head of event-driven research at Gordon Haskett, an independent research firm.

BlackRock Inc (BLK.N: Quote), Vanguard Group, State Street Corp STT.N and Fidelity Investments own a combined 16.2 percent of Yahoo shares, according to Thomson Reuters data, with Goldman Sachs owning another 4.2 percent.

Yahoo co-founder David Filo - one of the board members Starboard wants to remove - is the company's largest shareholder with a 7.5-percent stake.   Continued...

Yahoo CEO Marissa Mayer delivers her keynote address at the annual Consumer Electronics Show (CES) in Las Vegas, Nevada January 7, 2014. REUTERS/Robert Galbraith