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.