Daily Archives: July 23, 2008

Investment Advisory Firm Keeps Yahoo Intrigue Brewing

On the surface, Glass Lewis & Co’s latest advice to its clientele of institutional investors that own shares in Yahoo seems designed to press Yahoo’s board of directors to remove compensatory considerations that might dissuade another takeover bid from Microsoft — or from anybody else, for that matter.

Earlier today, Glass Lewis recommend that its clients vote against the re-election of three Yahoo directors — Yahoo Chairman Roy Bostock, and directors Ron Burkle and Arthur Kern — all of whom wield gavels on Yahoo’s compensation committee. Among the alleged crimes and misdemeanors that Glass Lewis imputes to the compensation committee are excessive compensation awarded to Yahoo executives during the fiscal year 2007 and the passage of an employee-severance program discourages an acquisition of Yahoo.

In the words of Glass Lewis:

Nominees BOSTOCK, BURKLE and KERN all served as members of the compensation committee in fiscal year 2007, during which time the Company paid more compensation to its top executives but performed worse than its peers. The members of the compensation committee have the responsibility of reviewing all aspects of the compensation program for the Company’s executive officers. It appears to us that members of this committee have not effectively served shareholders in this regard. Further, we are concerned that the committee approved the adoption of the Change in Control Severance Plans with potential brobdingnagian payouts, potentially discouraging a takeover.

Plaudits should go to the advisory firm for the use of the seldom-used word “brobdingnagian,” but otherwise one is inclined to think it is up to some mischief. In trying to oust the three board members, Glass Lewis effectively is attempting to stage a coup, making it possible for Yahoo to be sold to Microsoft, which patiently waits in the wings for impatient Yahoo investors to bash away at the company’s executives, board, and market value.

Microsoft’s divide-and-conquer tactics might have worked, too, except for the fact that Yahoo’s corporate-governance bylaws will not compel the company to accept the resignations of the three board members, even in the event that a majority of shareholders vote for their removal.

Expect more noise and more distraction when Yahoo’s shareholder meeting occurs on August 1. However, it’s in the best interests of Yahoo and its shareholders to move past the Microsoft affair and into a more constructive mode of long-term strategic planning and operational efficiency.

Yahoo Must Leave the Microsoft Debacle Behind

As one surveys the analyst commentary and investor reaction to Yahoo’s latest quarterly financial results, it is difficult not to conclude that CEO Jerry Yang and the board must cease and desist from any further acquisition-related discussions with Steve Ballmer and his predatory crew at Microsoft.

Not only is Microsoft arguably not interested in acquiring Yahoo, at least for what most third-party bystanders would consider fair value, but it is now blatantly obvious that the distraction represented by the seemingly endless Microsoft discussions has become a major impediment to Yahoo’s ongoing operational rhythm and its long-term strategic success as a viable company.

Now that Carl Icahn, the wheeler-dealer asset flipper and attention-deficit-addled investor, has been sated, at least temporarily, with a seat on the the board of directors, it is time for Yahoo to begin acting like a real company again.

As Lehman’s Douglas Anmuth says:

“YHOO needs to strengthen core operations for the stock to work, but we think it also needs to re-engage with investors, many of whom have viewed the company as an M&A and arb story over the last several months rather than a fundamental investment opportunity.”

Indeed, it is time for Yahoo to explain where it is going strategically, to explain how it will get there, and to demonstrate tangible progress toward its objectives. Anything less just invites a revival of fevered conjecture and speculation about a return of Microsoft to the degraded bargaining table.

At this point, that’s not good for anybody at Yahoo, except perhaps for Mr. Icahn, who remains compelled to make a deal — apparently any sort of deal — to slake his inveterate urges.

Spurned H-1B Workers Urged to Head North

It seems bizarre and wholly irrational that law-abiding H-1B visa holders whose permits expire after six years — one three-year term and one three-year extension — have no means of remaining in the USA as legal and productive citizens.

Still, that’s the reality, as experienced by thousands of foreign technologists who are forced to leave the USA after finishing the maximum six-year terms allotted under the H-1B visa system. For these typically well-educaed, well-trained, and professionally skilled individuals, no recourse exists for them to remain legally in the country, much less to gain citizenship.

The Canadian province of Alberta is attempting to capitalize on the situation by aggressively recruiting H-1B visa holders whose permits are set to expire.

Alberta cannot be blamed for its opportunism. The province has a fast-growing, vibrant economy — supercharged recently by the high prices of oil and other natural-resource commodities — and it has a clear need for IT professionals that can assist in application fields such as the computerized discovery, extraction, and refinement of natural resources. Alberta, of course, also has a growing IT industry, represented by scores of software companies, nanotechnology concerns, and HP’s VoodooPC unit.

Alberta’s pitch to H1-B visa holders can be found at this government website.

The US H-1B system appears to be serious broken. It probably won’t get fixed until a new president is in the White House, if then.