At Seeking Alpha there’s a post titled Yahoo!: Time for Plan B that tears apart Yahoo CEO Terry Semel and the organization’s lack of strategy. One thing the post calls for is not only Semel’s resignation or firing, but the replacement of 6 other Board members.
Terry Semel, Robert Kotick, Roy Bostock, Ron Burkle, Eric Hippeau, Arthur Kern and Gary Wilson should be Immediately Replaced on Yahoo!’s Board of Directors. Terry Semel ultimately reports to Yahoo!’s board of directors. The board must be held accountable for the numerous missteps outlined above. Of the 10 directors, we believe 7 should resign or Yahoo! shareholders should withhold votes for them at Yahoo!’s 2007 annual meeting of shareholders.
I’m not saying Yahoo’s performance has been anything to write home about but a) Yahoo has historically had good corporate governance and b) there are a bunch of buy ratings on the stock based on the expected success of Panama. With regard to governance, the Institutional Shareholder Services (ISS) Corporate Governance Quotient (CGQ) rates Yahoo as outperfoming 65% of the of the companies in the S&P 500 and almost 98% of the companies in the Software and Services group. Specifically, from the most recent CGQ report on Yahoo:
- The board is controlled by a supermajority of independent outsiders (independent outsiders greater than 67%)
- The nominating committee is comprised solely of independent outside directors
- The compensation committee is comprised solely of independent outside directors
Most of the other board specific practices of Yahoo! are rated positively. As far as sell-side research is concerned, here are some of the most recent headlines:
From RBC: Panama Transition Smooth, Raising Estimates For 1H07
From Jefferies: Solid Q + Panama Launch Date to Offset Conservative Guidance; Reiterating Buy
From William Blair: Yahoo: Seamless Transition to “Marketplace Design” so Far
Clearly, Yahoo! has not performed recently. But the complaints about governance seem too harsh and Panama should yield some improvement. So maybe the timing for a big change isn’t exactly right.