With its bruising proxy battle over, Yahoo stands poised to add a few more deck chairs among its board of directors.
But will Yahoo founder and CEO Jerry Yang get cast overboard in the process in favor of former AOL CEO Jonathan Miller?
Yahoo's board, as part of its settlement agreement with investor activist Carl Icahn, will appoint Icahn to its board after its August 1 shareholders meeting and then will add two more directors to its 11-member board from a pool of candidates that Icahn has recommended. That pool includes Icahn's former slate of dissident directors and Miller, who is a founding partner of investment firm Velocity Interactive Group and former AOL chairman and chief executive.
"If they pick Miller, it will send a strong message to Yang that they're picking his successor," said Jon Holman of executive search firm The Holman Group. "If I was Jerry Yang, I would be very nervous."
Yang, who has been on the receiving end of shareholder ire over the handling of Microsoft's sweetened $33 a share buyout offer and its subsequent withdrawal, has previously faced a call for his removal as CEO by Icahn. According to a letter from Icahn to Yahoo shareholders:
Our company is now moving toward a precipice. It is currently losing market share in its "Search" function, our current Board has failed to bring in a talented and experienced CEO to replace Jerry Yang and return Jerry to his role as chief Yahoo, and currently, it is witnessing a meaningful exodus of talent.
But one executive search recruiter noted Yang is likely safe in the near term, given eight of the 11 board members will be from Yahoo's current board, which serves a one-year term.
"I don't think Jonathan Miller poses a threat to Jerry in the near term. The board has been supportive (of Yang) and there are eight votes in the room," said Dennis Carey, a senior client partner for Korn Ferry International.
He noted that while it's becoming increasingly common to see a company's director pulled into the CEO slot, such as in the case of American International Group, Boeing, and, ironically, even Yahoo with Yang after Terry Semel was removed as CEO, it's generally not considered good practice to intentionally search for potential board members with the eye toward having them replace a current CEO.
"A director should not be brought in to eventually be a CEO, unless there is a clear understanding with the current CEO and board," Carey said. "Otherwise, it could create unnecessary conflict and tension, and no one needs that."
A spokeswoman for Miller said the former AOL executive is not "applying for the CEO job at Yahoo," and is currently not speaking to the press.
Furthermore, should Miller be appointed a Yahoo director and later called into action as a CEO, it's not a slam dunk that the Internet search pioneer would fare substantially better.
"Generally, he was a pretty solid executive (at AOL Time Warner), but hindsight being 20-20, and he could have been a scapegoat, AOL should have gotten into advertising more quickly and on a grander scale," said David Joyce, an analyst with Miller Tabak who covers Time Warner. "The company was happy to rest on the cash flow it received from its dial-up business, rather than move to broadband and social networking. AOL could have driven social networking as a business model, since they already had lots of people in chat rooms. But they dropped the ball on moving in that direction."
Another Time Warner analyst, however, attributed Miller with taking a turn-around situation at AOL in 2002 and arresting its freefall during the four years he served at the company.
In part, the analyst pointed to Miller's role in the acquisition of Advertising.com, which now serves as the basis for the company's advertising Platform A.
"The highlight for him was the acquisition of Advertising.com at a time when people didn't understand what Advertising.com was and how fast the market would grow," noted the Time Warner analyst.
But the analyst added that at the time of Miller's departure from AOL, the Internet pioneer had not shown significant improvement in revenue and market share.
A Time Warner director, however, said: "I wouldn't have anything negative to say about him."
And Laura Martin, an analyst with Soleil-Media Metrics, who follows both Yahoo and Time Warner, said: "His primary weakness of day-to-day operating tactics will not be relevant on the Yahoo board."
She noted: "He has the perfect skill set for the Yahoo board, with his strategic thinking about technology. He would bring a strategic perspective to Yahoo that has been missing to date."