Yahoo Inc. has agreed on Wednesday to add four candidates nominated by activist investor Starboard Value to its board. The search engine giant has been tormented with the criticisms about the company for more than a year and a half. The agreement puts end to a potentially distracting fight and paves the way for a potential sale of its core business.
Prior to the decision, the activist investor has been trying to unseat the company's entire board. One of the four director seats will be occupied by the Starboard CEO Jeffrey C. Smith. He will also join a special board committee overseeing Yahoo's sale process, reports The New York Times.
In addition to its CEO, Starboard has also nominated former Tribune CEO Eddy Hartenstein. The hedge fund has also named former Deutsche Bank Securities M&A specialist Tor Braham and Tessera Technologies chairman Richard Hill as the director for Yahoo.
Among the other three directors, Hartenstein has been incorporated on the Compensation Committee, while Braham joins the Audit and Finance Committee. Hill has been assigned to serve the Nominating and Corporate Governance Committee, according to a report published in Deadline. Starboard appears to be one of the largest shareholders for Yahoo and is concerned about the tech company's turnaround efforts. The New York hedge fund accuses the silicon-valley giant's management, board and CEO for repeatedly failing to make sufficient efforts in finding a buyer for selling assets. Even the tech giant has failed to spin off its stake in Yahoo Japan Corp. and Alibaba Group holdings, reports Los Angeles Times. However, the move provides Yahoo an opportunity to focus more on its sales efforts. The company has hired bankers over the past several months to supervise the auction. Allocation of director seats to Starboard also removes doubts over the seriousness of Yahoo's intent over exploring new opportunities in the sale process. It is the hedge fund that has mainly raised concerns over the sale process as part of its activism campaign. Alternative for bowing down to Starboard could be even harsher. The hedge fund has previous record for ousting the entire board of Darden Restaurants after rallying fellow investors who have been dissatisfied with the company's financial performance. Yahoo may have to embrace similar consequences if the consensus hasn't been reached.
