Ya-hoyvey

By Alan Rudnick

Some thoughts about Yahoo…  Maybe they should rename the company “Ya-hoyvey.”   After all, not vetting the resumes of CEO candidates – one of the board’s basic and most important functions – suggests a corporate parallel to the Keystone Cops.  It’s not just a blunder involving failed paperwork.  The board hired someone who lied; not a particularly good sign of an engaged board.

 The Yahoo drama also involved settlement with the Third Point hedge fund.  Terms of settlement include electing three Third Point nominees, including Third Point’s CEO, to the Yahoo board.  But, really, is this deal in the best interests of all shareholders?  Hedge funds owe loyalty to the folks whose money they invest.  As a Yahoo director, Daniel Loeb, Third Point’s CEO, now owes a primary fiduciary duty of loyalty to Yahoo and all its shareholders.  See the potential conflict?  Will Loeb and his compatriots steer Yahoo toward a strategy that coincides with Third Point’s investment objectives, or will they bring an objective viewpoint focusing on Yahoo’s long-term interests?

 Our bet is that the Ya-drama will continue.   Stay tuned.

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