With the deadline fast approaching for Microsoft to name an opposition slate to Yahoo's board of directors, chances are that the software giant is looking at corporate governance experts, academics, bean counter types, and former or retired Internet executives.
That's the assessment of proxy solicitors and executive search recruiters, as the March 14 deadline approaches for Microsoft to announce its dissident slate. The software giant, which launched an unsolicited $44.6 billion buyout bid for Yahoo on February 1, is likely planning to offer candidates for 10 director seats that are up for re-election at Yahoo's next annual shareholders meeting. A date for the meeting has not yet been set, but last year's was in June.
The purpose of running an opposition slate is twofold: to put pressure on Yahoo's board of directors to enter into negotiations, rather than remain radio-silent; and, if no deal is reached by the time Yahoo holds its annual meeting, to get its dissident directors elected with the hope of paving the way to a merger.
"Companies that enter into proxy fights need to be mindful of providing credible candidates," said Bruce Goldfarb, chief executive of proxy solicitation firm Okapi Partners. "Typically, you expect a dissident slate to include at least a financial expert, a business executive with a background that complements the target's operations--here someone with a technological background, someone who is good in corporate governance, and possibly an academic."
In other words, no matter how confident Microsoft may be in getting investors to rubber-stamp its proxy slate, investors should not expect to see Aunt Mae as one of the dissident directors.
Executive recruiter Keith Meyer, co-managing partner of Heidrick & Struggles' North America CEO practice, compared a proxy contest to a presidential-primary election campaign.
Microsoft would not only need to put forth a credible slate, but it would also need to assure investors that it will have their best interests in mind.
"There is a misconception that the proxy board is always aligned with the aggressor, but that is not always the case," said one executive search recruiter, who requested anonymity. "Their job is to find the maximum value for shareholders."
The other question that comes to mind is what would propel a person to enter a dogfight, especially one that is so public.
For academics teaching corporate-governance classes, it provides some practical experience and credibility to their work, the executive search recruiter said.
I guess that puts that old adage--"Those who can, do. Those who can't, teach"--to rest.
Retired chief executives and former chief financial officers are also targeted as potential proxy directors, in part because they have time to devote, industry experience, and often a sense of "business community" to help two organizations sort it out, said the executive recruiter, who has queried candidates on why they would be interested in such a task.
Executive recruiters say, don't expect to find current CEOs or CFOs joining a proxy slate, in part because you never know when you need your advisory as a friend in the business world.
These headhunters note that dissident directors also take the assignment knowing they are short-timers, win or lose. And, as a result, the types of directors selected tend to be different than those who would be nominated to serve a company for the long haul.
Directors aren't hired to hammer out strategy, but rather are named to the opposition board to carry out one task: maximize shareholder value.
"It's a different risk spectrum (that these board members fit), and it's our job is to find the right risk profile," Meyer said.
Often, executive recruiters, law firms, investment bankers, and proxy solicitors who represent the hostile player will return to the proverbial watering hole to find directors for the proxy slate.
"You look for someone who has been through this before and has an appetite to walk into a hostile situation," Meyer said. "It's not really a club, but it's more like a skydiver signing up for the next jump."
And chances are, these search executives say, Microsoft has already gotten some skydivers to make the jump.