Will Yahoo's Board Save Marissa Mayer?
There's a feeling of an endgame around Yahoo. To wit:
- The company sold billions of dollars in Alibaba shares and investors clamored for the proceeds. If they can pressure the company to sell even more when the lock up expires in about a year, a huge reason to own Yahoo will go away.
- A plan to turn Tumblr into the next YouTube has yet to materialize, and there are rumblings inside Yahoo that Tumblr founder David Karp isn’t a fan of the strategy.
- An activist investor, Starboard Value, has joined the fray, and Bloomberg reports that smaller fund managers now support Starboard's plan to break up the company. It seems that chief executive officer Marissa Mayer is losing support from within and from outside.
To hear the hedge funds circling the company tell it, the clock is running out for Mayer, and any day now they'll be calling the shots on strategy.
But of course, things are rarely so simple. Sure, Mayer alienated some advertisers. Sure, she disappointed her shareholders. And yes, it's easy to question her judgment when it comes to hiring, investing and acquiring. But for all of her faults, she's created allies where they count the most: the Yahoo board.
In the summer of 2013, Mayer pushed out the activist investor Dan Loeb and his strongest allies; last summer she filled four empty slots with hand-picked executives. Those people -- stock-brokerage pioneer Charles Schwab, former Walmart CEO Lee Scott, pharma executive Jane Shaw and Yahoo co-Founder David Filo -- will presumably buy her time, even while the outside world wants her head.
If you want to know when Mayer will be forced to bow to the activists, watch the board -- because she works for them. They're her moat. And they'll decide whether she'll stay long enough to turn Yahoo around.
Charles Schwab (June 2014) -- The San Francisco business luminary knows firsthand what it's like to make hard choices and fix an ailing business. He gained valuable turnaround experience when he returned in 2004 to overhaul his namesake company. Schwab joined Yahoo's board so that Mayer could learn from his experiences as a founder and an executive.
H. Lee Scott (June 2014) -- Mayer and Scott were on Walmart's board for two years until he stepped down in the wake of the retailer's vast bribery scandal in Mexico. Scott had served as Walmart's boss for nearly a decade and, like Schwab, he came to Yahoo in part to teach Mayer how to be a good CEO.
Jane Shaw (June 2014) -- Dr. Shaw, a pharmaceutical scientist and executive, has more tech experience that Schwab or Scott. She capped off 19 years on the Intel board with a stint as non-executive chairman from 2009 to 2012.
David Filo -- The Yahoo co-founder has been a vocal advocate for Mayer ever since she took the top spot; and his loyalty was rewarded, in part, with a board seat. He's often described as the heart and soul of Yahoo; and so long as Filo believes in Mayer, she'll have some support from the rank and file.
The Wild Card
Max Levchin (December 2012) -- The entrepreneur, investor and former chief technology officer at PayPal was courted by Mayer's champion-turned-adversary Dan Loeb, but Levchin has told the press that Mayer's hiring spurred him to take the job. Levchin -- the only one of Loeb's four directors to remain on the board -- has defended Mayer's seemingly unfocused strategy, telling Pando Daily this spring: “For every this or that or anything you see Yahoo do, there are probably two dozen things … that get put to pasture."
The Board Chair
Maynard Webb (February 2012, chairman since August 2013) -- Webb is a Silicon Valley guy. He was the chief operating officer at eBay and the founder of a mentoring start-up called Everwise and an early-stage venture capital firm. He's well connected and, according to some investors, he isn't one to rock the boat.
Voices From the Past
Tom McInerney (April 2012) -- The former chief financial officer of IAC/InterActiveCorp joined the board at a tumultuous time. He was appointed in March 2012 as part of an effort to stop Dan Loeb from getting his candidates elected. Though Loeb prevailed, McInerney has remained a director. Vanity Fair reports that he was against hiring Mayer because she'd never run a business, overseen profit-and-loss, or fired employees.
Sue James (January 2010) -- With four years of experience, James is the veteran board member. The former Ernst & Young partner audited large tech companies such as Intel, Amazon.com and Autodesk. She's not known for being overly sentimental. She was appointed to the board by ex-Yahoo CEO Carol Bartz (also a former CEO of Autodesk), yet let the board fire Bartz over the phone.
Ryan Jacob, a vocal Yahoo investor, says there are lots of "positive" ways Yahoo could try monetize its assets, including M&A or going private. None are easy, but one is inevitable. "The question is this," he says. "Will Yahoo be proactive in pursuing one of these options or will it get pushed by the activists?" That question isn't really one for Mayer so much as it is for Yahoo's board.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
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Tobin Harshaw at email@example.com