Proxy Advisor RiskMetrics Recommends Support For Yahoo Board

Jul.24, 2008 in Market Outlook

Last Update: 7/24/2008 12:18:00 PM

By Scott Morrison
Of DOW JONES NEWSWIRES

SAN FRANCISCO (Dow Jones)–Proxy advisor RiskMetrics Group on Thursday
recommended that Yahoo Inc. (YHOO) shareholders support incumbent board members
standing for re-election at the company’s upcoming annual meeting.

The advisory group reached its conclusion despite concerns about Yahoo’s recently
adopted severance plans, as well as the manner in which the board handled initial
negotiations with suitor Microsoft Corp. (MSFT)

RiskMetrics said a settlement earlier this week appointing activist shareholder
Carl Icahn and two allies as directors will enable the newly formed board to
address compensation issues and any strategic decisions the struggling Internet
company may face.

RiskMetrics’ support for the Sunnyvale, Calif., company’s board follows a similar
recommendation Wednesday from Egan-Jones Proxy Services. But Glass Lewis & Co. on
Tuesday harshly criticized the three Yahoo directors on the board’s compensation
committee and recommended their ouster at the annual meeting.

Recommendations from the top three proxy advisory group were expected to be
highly influential in determining whether Icahn would succeed in his bid to oust
Yahoo’s board, fire CEO Jerry Yang and try to sell some or all of Yahoo to
Microsoft.

But Yahoo and Icahn on Monday struck a deal that granted him and two allies seats
on the company’s board, which will expand from nine members to 11.

Shareholders will get a chance to vote on Yahoo’s entire board at the company’s
Aug. 1 annual meeting, although Robert Kotick, CEO of videogame maker Activision
Blizzard Inc. (ATVI), will not seek re-election.

Microsoft put Yahoo in play six months ago when it made an unsolicited takeover
offer that Yahoo subsequently rejected. Yahoo also enacted severance plans that
could trigger expensive payouts to fired employees, a move widely seen as an
effort to thwart Microsoft’s takeover attempt.

The Redmond, Wash., software company ultimately withdrew its offer, and Yahoo
shareholders howled in anger over Yang’s failure to clinch a deal with Microsoft.

Icahn jumped into the fray in hopes he could bring Microsoft and Yahoo to the
table, but Microsoft has indicated that it now wants only to acquire Yahoo’s
online search business.

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