Investor Activist Pushing for Changes at Yahoo

If you thought Michael Arrington took Carol Bartz to task earlier today, you should check out the verbal drubbing she received earlier this month from investor activist Eric Jackson.

His blistering attack on Bartz at TheStreet.com is unsparing. Jackson builds a meticulous and merciless case against Bartz and her enablers on the Yahoo board of directors, a group that seems to have an inveterate predilection for approving outsize compensation packages for the company’s senior executives. I suppose the board members figure it’s only shareholders’ money, not theirs.

Jackson’s assault on Yahoo’s largesse toward its executive team is just the latest salvo in his fusillade against the company’s board members.

What Jackson finds particularly galling is that the executives’ stratospheric remuneration largely has been disconnected from the company’s performance. As he says at one point, he could countenance high-value executive compensation for high-value returns to investors; but that’s not what Yahoo shareholders have been getting. At the end of each quarter, they’ve been more likely to get a lump of coal than a shimmering diamond.

Adding insult to shareholders’ financial injury, Yahoo insiders have been selling their shares with alarming regularity. In Jackson’s words:

Insiders have bought $67 million in Yahoo! stock in the past two years. However, of this amount, the vast majority was bought by Carl Icahn for his hedge fund, which he has already sold (and more — $189 million) in the last two weeks. A small amount of stock was purchased by Michael Murray, Yahoo!’s chief accounting officer, who announced last week that he’s leaving the company. Not including Icahn’s and Murray’s stock purchases, Yahoo! insiders have collectively bought only $103,700 in stock in the past two years.

Over the same period, Yahoo! insiders have cashed out $233 million in stock.

While Bartz should not be held accountable for what transpired before her arrival at Yahoo, she should be held to account for her own actions and excesses. Bartz has been with Yahoo since January, but she’s already dumped shares valued at $2 million to cover her personal tax bill, according to Jackson.

After pressing his argument, Jackson kindly proffers suggestions as to how Yahoo can “fix this mess.” One of his proposals is that Yahoo’s compensation committee resign from the board of directors. Another is that the well-remunerated Bartz (she’ll collect more than $187 million over four years, presuming she hits her performance targets) should buy stock in Yahoo amounting to a significant chunk of her net worth.

Actually, all of his suggestions are worth reading, particularly if you’re a Yahoo shareholder.

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