SAN JOSE, California (Reuters) - Yahoo Inc’s board of directors won strong backing from shareholders at its annual meeting on Friday, with Jerry Yang, the company’s embattled CEO, receiving 85 percent of the vote in his favor.
Investors holding nearly 76 percent of Yahoo’s 1.38 billion shares gave solid votes in favor of all nine current directors, in what represents an endorsement of their tough stance with Microsoft Corp in talks on a merger or partial sale.
Executives and board members tried to soothe dissenting investors, insisting Yahoo had been serious in the Microsoft talks and that it had good prospects in the next three years.
Seeking to counter attempts by some to blame Yang for talks collapsing, Chairman Roy Bostock said Yahoo’s board “called the shots” when discussing Microsoft’s proposals, including a $47.5 billion bid and attempts to buy Yahoo’s Web search business.
Bostock said he could not understand why the software maker withdrew its bid. “There was never a compelling offer put on the table,” he said. “That never occurred in this process.”
A Microsoft spokesman disputed Bostock’s version of events, saying “Yahoo is attempting to rewrite history yet again.”
The solid vote in favor of the directors surprised even some Yahoo officials, who had braced for a stronger protest vote after the tumultuous Microsoft saga and older grievances over Yahoo’s slipping performance against Google Inc.
Three members of Yahoo’s executive compensation committee — Bostock, Ron Burkle and Arthur Kern — each received about 80 percent in favor of re-election, with the remaining votes withheld in protest. The “Gang of Three,” as one dissident labeled them at the meeting, had received more than a 30 percent unfavorable vote at the 2007 annual meeting.
Several proxy advisory firms whose recommendations can carry weight with institutional investors had advised investors to withhold their votes for the three directors.
They have been the target of corporate governance critics over big stock-option packages granted to former Chairman and Chief Executive Terry Semel, who resigned as CEO after protests at last year’s meeting over Yahoo’s flagging performance.
In a measure of ongoing concern over generous option grants to executives and directors, owners of 339.8 million shares, or 32 percent of the voting stock, backed a non-binding proposal calling for a pay-for-performance plan that Yahoo had opposed.
A handful of investors at the meeting criticized the board and management, highlighting dissatisfaction that has hurt the stock since talks on a full Microsoft merger broke up in May.
“I think you have overpaid in terms of executive compensation, overplayed your hand with Microsoft and overstayed your welcome on the board,” said Eric Jackson, a vocal critic of Yahoo’s leadership, who leads a loose-knit group of shareholders who collectively own 3.2 million shares.
Another investor said he wanted to know more about how much time Yahoo directors worked to earn their pay.
The board chairman said he would be happy to fill out a timesheet, given the hours spent negotiating with Redmond, Washington-based Microsoft over the last six months. “It’s been about 26 hours in the course of a 24-hour day,” Bostock said.
Others renewed calls for Yahoo to do more to protect the human rights of users in authoritarian countries such as China, after Yahoo was widely criticized for handing over e-mails to authorities that they used to jail political dissidents.
Yet Yahoo did receive praise from other investors, including Richard Lammerding, 71, of Cloverdale, California, who said he owns 1,200 Yahoo shares with his wife.
“My support and my wife’s support is with this board and this management team,” he told the annual meeting in San Jose, California, a few miles from Yahoo’s Sunnyvale headquarters.
“I think Microsoft is the wrong corporation” for Yahoo to merge with, Lammerding said, labeling the software company an “over-the-hill, green-tentacled octopus from Redmond.”
Yahoo had averted a proxy battle with billionaire Carl Icahn two weeks ago by reaching a settlement with the activist investor that will expand its board to 11 members from nine and result in Icahn joining the board. But one of Icahn’s potential candidates appeared to drop out of the picture.
Former AOL CEO Jonathan Miller was named as a potential director, but AOL parent Time Warner Inc said on Friday it had not waived a non-compete clause that would bar him from joining Yahoo before March 2009.
A Yahoo spokeswoman declined to comment on the action.
In a blog post on Thursday, Icahn had downplayed the annual meeting’s importance and said he would not attend.
Yahoo shares slipped 9 cents on Friday to $19.80, not far above the $19.18 that they fetched the day before Microsoft made its interest public on February 1. Microsoft’s last offer for the company would have valued Yahoo at $33 per share.
Additional reporting by Michele Gershberg and Kenneth Li in New York and Anupreeta Das in San Francisco; Editing by Braden Reddall