As Yahoo shops itself around to possible buyers, one of the company's major stakeholders has called on co-founder and "Chief Yahoo" Jerry Yang to resign from the company's board, according to a report.
In a letter today, Daniel Loeb, manager of hedge fund Third Point, cited Yang's "ineptitude in dealing with the Microsoft negotiations to purchase the company in 2008" and said Third Point was against a "sweetheart" deal that would sell Yahoo to private equity firms, The Wall Street Journal reported (subscription required).
Yang, who owns 3.6 percent of Yahoo, has been arranging meetings with private-equity buyers in an effort to finance a minority-stake sale of the company, the Journal reported, citing unnamed sources.
Such a deal would involve an ownership group made up of Yang; co-founder David Filo, who owns about 5.9 percent of Yahoo; and a buyer who would snap up about 20 percent of the company, the Journal reported. The sale wouldn't require a shareholder vote.
Loeb and others are worried that Yang may be more concerned about maintaining his longstanding influence over the company than in doing what's best for all Yahoo shareholders, the Journal said.
The minority-stake sale effort "looks strictly like an act of entrenchment and ballot-stuffing in front of the next annual meeting as opposed to an attempt to create value," the Journal quoted Peter Schoenfeld as saying. Schoenfeld is CEO of P. Schoenfeld Asset Management, which invests in Yahoo on behalf of clients.
Some have said that Yang's attachment to the company he helped create contributed to his failure, during a second stint as CEO, in 2008, to sell the company to Microsoft for more than $45 billion. Yahoo is worth less than half that today.
Yang was CEO of Yahoo for a brief period during 1995 and returned to the post from 2007 to late 2008. He now sits on the board and holds the amorphous title of Chief Yahoo.
Sources told the Journal that Yang has recently ratcheted up his involvement in the company's affairs, sitting in on high-level meetings and taking part in company strategy, including Yahoo's recently announced buy of Interclick, a company that makes advertising technology.
In a statement today, Yahoo said its "Board of Directors comprehensive strategic review is being properly managed for the benefit of all shareholders and is guided by outside counsel for the independent directors and investment bankers retained separately by the Board," the Journal reported.
At the AsiaD Conference last month, Yang said Yahoo's board was considering a number of strategic options, including the sale of the company intact or in pieces: "The intent going in is not to put ourselves for sale. The intent is to look at all the options. So far we have not ruled out any possibilities."
The pressure on the company to make a move stems from its stagnant stock price, high employee attrition rate, and withering product development efforts. Yahoo has been in a muddle lately, and the board exacted a high price from CEO Carol Bartz in September, giving her the sack.