Yahoo was forced to admit that its embattled chief executive
officer and chairman did not have as much support among
shareholders as it first claimed.
The company said that Jerry Yang, the chief executive officer,
and Roy Bostock, chairman, won solid support at the annual meeting
last week despite criticism over the way they dealt with a
bid earlier this year from Microsoft. Several investors slammed
them for holding out for too high a price.
Yahoo reported that Yang won support
from 85% of the shareholders at the annual meeting, with Bostock
backed by 80%. Just before the meeting, Yahoo announced an
agreement with Carl Icahn, the activist investor who wanted to
sell the company to Microsoft, under which he dropped his attempt
to oust the directors in return for a place on an extended board
for him and two allies.
Capital Group, an investment firm which owns more than 16% of
Yahoo through various funds, asked its agent, Broadridge Financial
Solutions, to investigate whether its votes at the shareholder
meeting had been counted properly. Capital Group said that each of
the funds made its own decision on how to vote.
After examining the issue, Broadridge said that a "truncation
error in the final tabulation" of the figures that it sent to Yahoo
had led to under-reporting the number of shares for which support
was withheld for several Yahoo directors, including Yang and
Bostock.
The recount left Yang with only 66%, and Bostock only 60%.
The outcome remains the same, although the revised level of
support represents an embarrassing episode for Yahoo. A vote of
more than 20% against a director is regarded as showing a severe
level of shareholder discontent.
There was a similar shareholder backlash at last year's annual
meeting against Terry Semel, then the CEO. Yahoo's board received
only 67% support following criticism over the level of Semel's pay.
He resigned later the same month.