Loeb was told by Yahoo Chief Executive Officer Scott Thompson that he was not given a director position because he “would not be additive to the board” and would be “conflicted” because he is a large shareholder, according to an open letter sent by Loeb to Thompson. Earlier this week, Yahoo (YHOO) announced it was adding three new directors — a group that didn’t include Loeb or any of his nominees.
“Only in an illogical Alice-in-Wonderland world would a shareholder be deemed to be conflicted from representing the interests of other shareholders because he is, well, a shareholder too,” Loeb, CEO of New York investment firm Third Point LLC, said in the letter. “This sentiment further confirms that Yahoo’s approach to board representation is ‘shareholders not welcome.’”
Thompson, who took charge in January, shook up the board amid mounting pressure from investors to make changes at the struggling company. Third Point, which owns about 5.8 percent of Yahoo, wasn’t satisfied with the move and is pushing ahead with plans to wage a proxy fight. The firm is seeking a shareholder vote on a slate of four new directors, including Loeb.
Dana Lengkeek, spokeswoman for Sunnyvale, California-based Yahoo, didn’t immediately respond to a request for comment.
‘Cost and Distraction’
Yahoo (YHOO) said earlier this week that the board had offered to add one of Third Point’s nominees, Harry Wilson, and another member that both sides could agree to. Loeb rejected the proposal and refused to back down from the dispute unless he himself was named a director, Yahoo said.
Yahoo reached out to Third Point on the nominees to avoid the “cost and distraction that inevitably accompanies a proxy fight,” the company said. Still, the board determined that other nominees were more qualified than Loeb to be a director, Yahoo said. “The board remains open to hearing Third Point’s ideas and to working constructively with Third Point,” the company said.
Third Point remains willing to work with the company, according to today’s letter.
“By seeking four seats, Third Point does not look to control the board, and any individual voice in the room would be only one of 11 or 12,” Loeb said. “It is absurd to assert a ‘conflict’ that would render a board member unqualified based either on ownership or a sense of urgency to repair a company that has been — by your own admission — languishing for years.”
Yahoo shares fell less than 1 percent to $15.31 at 2:49 p.m. New York time. The stock has declined 5 percent this year.