Saturday 1 October 2016

Yahoo shareholder names former company executives among potential Mayer replacements

Published 15/12/2015 | 09:06

Marissa Mayer, chief executive officer of Yahoo! Inc., attends the Time 100 Gala, a celebration of 'TIME' magazine's 100 most influential people in the world, in New York, U.S., on Tuesday April 23 2013. Photographer: Peter Foley/Bloomberg *** Local Capti
Marissa Mayer, chief executive officer of Yahoo! Inc., attends the Time 100 Gala, a celebration of 'TIME' magazine's 100 most influential people in the world, in New York, U.S., on Tuesday April 23 2013. Photographer: Peter Foley/Bloomberg *** Local Capti

An outspoken Yahoo Inc shareholder said he considers former Yahoo executives Ross Levinsohn and Jacqueline Reses as potential replacements for Chief Executive Officer Marissa Mayer as the internet company comes under pressure to change strategic direction.

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Eric Jackson, managing director at New York-based SpingOwl Asset Management, which sent a 99-page strategic analysis to Yahoo's board on Friday, said in an interview that the activist hedge fund has several people in mind to replace Mayer but is not yet backing one candidate.

Jackson is among the growing list of Yahoo shareholders who are voicing their frustration with Mayer and calling for a different path than the one Yahoo recently laid out.

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"(Former Yahoo interim CEO) Ross Levinsohn was passed over for the job four year ago. I think the basic strategy that he was advocating was in hindsight the right strategy," Jackson said.

He added that Reses, who was formerly chief development officer at Yahoo and left for payment processor Square in the fall, is interesting because she is familiar with the company and also has a private equity background, having worked at Apax Partners before joining Yahoo.

"Whoever is the next CEO will need to take Yahoo core down to its studs in terms of its costs," Jackson said.

Yahoo declined to comment.

Yahoo shelved plans to spin off its stake in Chinese e-commerce giant Alibaba Group Holding Ltd last Wednesday, under pressure from investors - including activist Starboard Value - worried about billions of dollars in tax liabilities that could weigh on the value of the entity.

The company said that it would, instead, look at creating a separate company to hold the rest of its assets, in a strategy it is calling a "reverse spin" of its original plan.

According to a person familiar with the matter, Mayer has the support of Yahoo's board and will be given time to work through the new plan to carry out the reverse spin. Due to the complex nature of the plan, however, it could take at least a year to finish.

Starboard Value and other shareholders are unlikely to share the board's patience and have have written letters to the Yahoo board, voicing their opposition to the company's current path.

SpringOwl, a roughly $300 million fund managed by activist investor Jason Ader, is pushing Yahoo to cut costs and bring in a strategic partner such as Liberty Media to help deal with tax issues. SpingOwl has not revealed the size of its stake in Yahoo.

SHAREHOLDER URGES SALE OF COMPANY

Canyon Capital Advisors LLC, which owns about 1.1 percent or 10 million shares in Yahoo, said in a letter dated Dec. 11 that the company should pursue a sale of the whole company or its various assets as soon as possible. Canyon feels that the company, by saying it will spend a year to evaluate the spinoff of the core business, is wasting too much time while its business erodes.

Another top shareholder who spoke with Reuters who did not want to be named, said that after the company announced the reverse spin plan, the fund wrote a letter to the board saying it should proceed to sell the core business instead.

Starboard originally agitated to have Yahoo sell its stake in Alibaba but then changed its view that the company should put its core business up for sale after the U.S. Internal Revenue Service in September denied a request for a ruling on whether the spinoff would be tax free.

Starboard has indicated that it is willing to launch a proxy fight ahead of the company's annual meeting this spring if it is unhappy with Yahoo's performance.

Reuters

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