Digital Media

Update at 3:08 p.m. PDT, with Carl Icahn's appointment to the board and closing stock price.

The results are in on the re-election of Yahoo's directors, and the . No one received more than a 22.1 percent withhold vote, compared with a substantially higher 34 percent last year, according to the company.

Shareholders withhold votes to re-elect directors as a means to send a message of investor dissatisfaction to a company and its board.

Here's how each director stacked up on their re-election:

Roy Bostock, chairman, a 20.5 percent withhold vote

Ronald Burkle, a 18.8 percent withhold vote

Eric Hippeau, a 9.3 percent withhold vote

Vyomesh Joshi, a 7.1 percent withhold vote

Arthur Kern, a 22.1 percent withhold vote

Robert Kotick, a 7.6 percent withhold vote

Mary Agnes Wilderotter, a 7.8 percent withhold vote

Gary Wilson, an 18.2 percent withhold vote

And, drumroll please...Jerry Yang, a 14.6 percent withhold vote

These less-disapproving-than-last-year's results come as two advisory services to institutional investors issued recommendations to its clients, i.e. pension funds, mutual funds, and asset managers, to withhold votes for members of Yahoo's compensation committee and also longtime director Gary Wilson. Bostock, Burkle, and Kern sit on the compensation committee.

One investor said he was a little surprised that there weren't more shares withheld.

"I thought it would it have been around 40 percent withheld. I thought it would be more than last year," said Dan Strickfaden, a Yahoo investor for more than five years. "I have no problem with Yahoo as a company. I have a problem with the board."

He added that he withheld votes for all nine Yahoo directors.

Yahoo also announced that Kotick, as called for in the proxy fight settlement with investor activist Carl Icahn, resigned his board seat immediately after the meeting. Icahn was appointed by the board to fill Kotick's seat.

Yahoo's board expects to expand by two additional seats by August 15 with appointees from a pool of candidates Icahn has selected.

In releasing the election results, Yang said in a statement:

We are at a unique point in our history, where we have the eyes of the world focused on our company and tracking our performance. We are redoubling our commitment to driving sustained, profitable growth for our stockholders. The value inherent in Yahoo's unique collection of assets is truly extraordinary, and the progress we've made on our initiatives this year signals our ability to capitalize on the underlying potential of these assets.

Click here for full coverage of Yahoo's shareholders meeting.

Update 7:59 a.m. PDT: Added link to Carl Icahn's blog about his thoughts on the Yahoo shareholder meeting.

Believe in deja vu? Yahoo shareholders may when they file into the company's annual shareholders meeting on Friday.

Last year, an angry mob of investors took Yahoo CEO Terry Semel to task at the annual shareholders meeting, citing the company's lackluster performance and lucrative compensation awards. A week later, Semel resigned from his executive post, passing the baton to company co-founder Jerry Yang.

Fast-forward a year later and the situation is expected to be markedly similar. When Yang takes the stage at the annual shareholders meeting, he'll likely face not only a sea of angry investors but one that will include some shareholders who are making a repeat appearance at the microphone to voice dismay.

But the tenor of this upcoming meeting is expected to be even more pitched, given that Yang and Yahoo's board rejected a $33 a share buyout bid from Microsoft in May and the stock has now roughly come full circle to where it was trading before Microsoft's initial bid of $31 a share in February.

Yahoo closed at $20.03 a share on Wednesday.

But besides the fury that is expected at the meeting, what else might investors, employees, and Yahoo customers look forward to at this significant event for the Internet's search pioneer?

For starters, Yang will not be alone to fend off a potentially hostile crowd. Some, but not all, of Yahoo's current board members are expected to be in attendance, such as longtime director Eric Hippeau and newcomer Maggie Wilderotter.

Carl Icahn, the activist investor who launched a proxy fight to push Yahoo and Microsoft back to the table, will not make an appearance at the meeting, after having reached a settlement with Yahoo last week, as Icahn notes in his blog Thursday morning.

Under that arrangement, Yahoo's current board of nine directors will be up for re-election to another one-year term. Based on the settlement agreement, it is anticipated that sometime between the shareholders meeting on Friday and the end of business Monday, Yahoo's director Robert Kotick will resign from the board and Icahn will be appointed to his seat. The board will also vote to expand its size to 11 members from nine.

While the settlement agreement also calls for the Yahoo board, which would then include Icahn, to fill the two newly added seats with two folks from Icahn's pool of candidates, don't expect those two new faces to be named at the shareholders meeting, said a source familiar with the company. Yahoo has until August 15 to fill those two positions.

During the meeting, Yang & Co. are expected to provide a presentation on the state of the company, in which a question-and-answer session will follow from the floor.

Investor activist Eric Jackson said he plans to make a return visit to the meeting and will once again make a case for his recommendation that investors withhold votes to re-elect certain Yahoo directors. Jackson is asking investors this year to withhold votes for compensation committee members Roy Bostock, Yahoo chairman, Arthur Kern and Ron Burkle, as well as Hippeau, because of the length of time he has served on the board.

And while Jackson, along with advisory service to institutional investors Glass Lewis & Co. and Proxy Governance, have come out with recommendations to withhold votes or vote against several Yahoo directors, the effect will basically serve as a symbolic gesture to Yahoo's board on the level of investor dissatisfaction.

That's because the top vote-getters are the ones who will be elected to the available board seats, which means everyone will be re-elected in an uncontested race.

Nonetheless, the higher the percentage of votes cast that are marked with either "against" or "withhold," serves as barometer of investor discontent. Last year, Yahoo's board was re-elected with only 66 percent approval, whereas boards typically receive 80 percent to 90 percent of the votes cast.

And should any one director receive less than a simple majority of the votes cast, under Yahoo's bylaws they are required to automatically tender their resignation. But that too will unlikely lead to any director's ouster, given the board can vote to reject the resignation.

Yahoo, at the shareholders meeting, is expected to provide a 10,000-foot view on whether the directors received enough votes to be re-elected as a group, with the per director vote results to be released later, said one person familiar with the plans.

While the shareholders meeting is expected to bring a lot of one-day drama, keep an eye out for the ensuing two weeks as Yahoo's board undergoes a likely change in voice as Icahn and two members picked from his pool of candidates are added to Yahoo's board.

Click here for full coverage of Yahoo's shareholders meeting.

The jump to Juniper Networks as CEO seems almost a no-brainer for Microsoft executive Kevin Johnson.

Johnson will not only be top dog at the networking company when he arrives September 8, but he's landing a $5 million signing bonus that'll be doled out over three years and an annual base salary of $800,000, according to Juniper's filing with the Securities and Exchange Commission on Monday.

Johnson, who's leaving his post as Microsoft's online and Windows chief, will also land two stock option grants that total 1.6 million shares vesting over four years, once he starts his new gig.

Juniper's stock is currently trading around $25 a share, giving his stock options grant a value of $40 million. The exercise price of Johnson's stock options, however, will be based on the closing price of the day he receives the grant.

For Johnson, he will not only be embarking on a new adventure but also leaving roughly six months of Yahoo-Microsoft drama behind, in which he has played a key role.

Back on February 1, Microsoft made an unsolicited buyout bid of $31 a share for Yahoo, followed by a sweetened bid of $33 a share in May, only to be withdrawn after Yahoo countered with a $37 a share bid. A couple of attempts at striking a search-only acquisition deal were proposed by Microsoft, only to be rejected and, in the background, Icahn briefly waged a proxy fight with Yahoo with Microsoft playing a supporting role.

And as Yahoo investors endured a roller coaster ride with the stock during the past six months, they were dealt a strong blow Wednesday, when news of Johnson's impending departure from Microsoft began to circulate. Yahoo's shares closed that day down 4.7 percent to $20.39 a share.

News of Johnson's departure came out several days after Yahoo and Carl Icahn announced they had reached a settlement and the investor activist was withdrawing his proxy fight.

One source familiar with Juniper's CEO search said the timing of Johnson's appointment as CEO and the Yahoo-Microsoft saga are just coincidental.

"Juniper has been searching for a CEO for some time now...it just happened to overlap with what was going on at Yahoo. Yahoo was not a trigger for Kevin's departure and his candidacy wasn't linked to what would or would not go on at Yahoo," the source added.

Yahoo dipped below $20 a share Tuesday morning, following a report in the San Francisco Chronicle that T. Boone Pickens dumped his entire stake of 10 million shares.

Shares of the Internet pioneer fell as low as $19.71 in morning trading, coming within a breath of the $19.18 that the stock closed at on the day before Microsoft announced its unsolicited buyout bid of $31 a share. Microsoft later bumped it up to $33 a share, which was rejected.

Pickens jumped into the stock in May, following an announcement by investor activist Carl Icahn that he would wage a proxy contest to pressure Yahoo into accepting a deal with Microsoft. Icahn, however, reached a .

"I think that Yahoo management was pathetic," Pickens reportedly said during the Chronicle editorial board meeting he was addressing.

Pickens told the Chronicle that he sold his shares at a loss, as his patience for a deal between the two companies grew thin. The billionaire investor declined to reveal the size of his loss, according to the report.

Yahoo's annual shareholders meeting is scheduled for Friday.

Yahoo's current board of directors received an endorsement Thursday, when influential advisory service RiskMetrics Group recommended to its institutional investor clients to vote for all of Yahoo's directors at the upcoming annual shareholders meeting.

That recommendation runs counter to one issued the day before by Glass Lewis & Co., another institutional investor advisory service that makes recommendations to pension funds, mutual funds and asset management companies on how to vote on issues contained within companies' proxies. Glass Lewis, as well as investor activist Eric Jackson, is calling on Yahoo investors to vote against or withhold votes for several of the Internet search pioneer's directors.

RiskMetrics advised its clients to vote "for" all nine current directors, although Robert Kotick has indicated he will not run for re-election at the company's August 1 shareholders meeting. That decision came as part of a settlement agreement with Yahoo and investor activist Carl Icahn, who dropped his proxy fight with the company and, in turn, will have two members from his designated list of potential candidates and himself appointed to the company's expanded 11-member board.

Although RiskMetrics endorses the re-election of Yahoo's current board, it's not without concerns over Yahoo's handling of its merger talks with Microsoft.

According to RiskMetrics report to its institutional investors, it drew this conclusion regarding Yahoo:

We believe that Yahoo!'s compensation practices, in particular the newly-adopted severance plans, as well as the way the board handled the negotiations with Microsoft at the initial stage, are concerning. Many investors believe these issues would warrant changes at the board level. However, given Mr. Icahn's lack of a plan for a standalone Yahoo! and a replacement candidate for CEO Yang, a complete overhaul of the board with full a slate from Mr. Icahn was widely regarded as unlikely. On July 18, 2008, Legg Mason CIO Bill Miller, a major Yahoo! shareholder, stated the following: "In general, we believe it is appropriate for large shareholders to have representation on corporate boards if they so desire. Mr. Icahn's slate includes people experienced in technology, advertising, capital markets and governance." We believe the settlement appointing Mr. Icahn as a significant shareholder representative as well as two of his selected nominees with relevant industry experience have achieved what most shareholders called for. We also believe the newly-formed board will be able to address the issues highlighted above. Therefore, we recommend that shareholders support the incumbent directors that are standing for re-election.

Although RiskMetrics is calling for the re-election of Yahoo's current board, Glass Lewis on Wednesday advised its clients to issue "against" votes for Yahoo chairman Roy Bostock, Ron Burkle, and Arthur Kern.

And dissident Yahoo shareholder Jackson is asking investors to not only withhold votes for those three directors, but also for Eric Hippeau.

Jackson noted that he holds Bostock and Burkle the most responsible for the failed talks with Microsoft, as well as holding the two directors and Kern responsible for an above market compensation plan for Yahoo executives.

Despite the Glass Lewis and Jackson recommendations for withholding votes or voting against the named Yahoo investors, one proxy solicitor noted its unlikely any one of those directors will be subject to the 50 percent threshold that would trigger an automatic tendering of their resignation to the other board members who are re-elected.

"They won't get to a 50 percent "withhold," in part because Icahn has decided to go with the board," the proxy solicitor said.

And even if that were to happen, under Yahoo's policy, which is similar to those used by a majority of S&P 500 companies, the remaining board could refuse to accept the tendered resignation, thereby keeping the director in question on board.

Among the S&P 500 companies, 72 percent have adopted policies that would require directors to automatically tender their resignation if they fail to be re-elected by at least 50 percent of the votes cast.

But despite this policy among a number of large corporations, only a handful of cases have come up over the last few years where that threshold was crossed, said Patrick McGurn, with RiskMetrics Group's ISS Governance Services unit. And of those cases, McGurn does not recall a board accepting a tendered resignation from a director who had triggered that automatic resignation.

"Investors think long and hard if their (withhold or against) vote could potentially unseat a director," McGurn observed.

And in looking at the Yahoo case specifically, McGurn said he would be surprised if the withhold votes for the current directors reaches into the double digits.

"Withhold votes are usually used to communicate something to the board. But in this case, investors had lots of opportunities to voice their concerns," McGurn observed.

Yahoo President Sue Decker has taken the high road. In a CNBC interview that aired Wednesday, she said she looks forward to meeting investor activist Carl Icahn when he joins the company's board and would "love to get his advice."

Yahoo President Sue Decker

(Credit: Yahoo)

Icahn, who reached a settlement with Yahoo earlier in the week, agreed to halt his proxy fight in exchange for being appointed to the board after the company's August 1 shareholders meeting. Yahoo also agreed to expand its board to 11 members and select two directors from a list that Icahn provided.

In the past two months, Yahoo and Icahn have been exchanging barbs, as the proxy fight gained steam.

Nonetheless, Decker, who has never met Icahn, said in the interview recorded Tuesday:

I'm totally looking forward to meeting him and would love to get his advice.

And in defense of turning down the $33-a-share buyout offer Microsoft had floated to the Internet search pioneer, which it later withdrew after Yahoo countered with a bid of $37 a share, Decker had this to say:

Pre- and post-Microsoft's offer, our stock is pretty much in the same place as when we evaluated its $31-a-share bid.

She noted that the stock has held its ground, despite a tough economic environment. And that she tries to avoid getting consumed by the swirl of distractions that have been under way since Microsoft announced its unsolicited buyout bid in early February.

I try to focus on things I can control.

Is it frustrating, sure, when people talk about the departure of employees, but I would like to get the distractions behind us.

As Yahoo heads toward its annual shareholders meeting and institutional investor advisory services weigh in on which Yahoo directors to re-elect, the background noise may still be a bit distracting for the next week and a half.

An advisory service to institutional investors issued a recommendation Wednesday that its clients vote against the re-election of three Yahoo directors.

Yahoo Chairman Roy Bostock and directors Ron Burkle and Arthur Kern, all of whom sit on the compensation committee, received a thumbs down from influential institutional investor Glass Lewis & Co.

Glass Lewis, as well as RiskMetrics and Proxy Governance, issue recommendations to their clients on how to vote on proxy matters. These clients include mutual funds, pension funds, and asset management companies, which often hold large blocks of stock in various companies.

Glass Lewis is advising its clients to vote against Bostock, Burkle, and Kern because of the level of compensation awarded to Yahoo executives and also because of the controversial employee severance plans Yahoo put in place should there be a change of control at the company.

On the issue of dinging the three compensation committee members, Glass Lewis wrote in its report:

Nominees BOSTOCK, BURKLE and KERN all served as members of the compensation committee in fiscal year 2007, during which time the Company paid more compensation to its top executives but performed worse than its peers. The members of the compensation committee have the responsibility of reviewing all aspects of the compensation program for the Company's executive officers. It appears to us that members of this committee have not effectively served shareholders in this regard. Further, we are concerned that the committee approved the adoption of the Change in Control Severance Plans with potential brobdingnagian payouts, potentially discouraging a takeover.

Additionally, Mr. Bostock serves as chairman of the nominating and corporate governance committee. At last year's annual meeting, Messrs. Bostock, Burkle and Kern each received over a 31 percent vote against their re-election. In our 2007 Proxy Paper, we recommended voting against each of these directors due to the Company's excessive compensation practices. We believe this raises concerns about whether the nominating and corporate governance committee is fulfilling its duty to shareholders considering that all three directors remain on the board. Moreover, we find it disconcerting that Messrs. Bostock and Kern continue to serve on the committee charged with overseeing governance issues for the Company.

Despite issuing a recommendation for investors to vote against the re-election of Bostock, Burkle, and Kern, in practical terms the three will likely retain their board seats no matter how the vote turns out.

Yahoo, under its bylaws, requires any director who receives more than a 50 percent "against" or "withhold" vote to automatically submit their resignation to the board for consideration. The board can either accept the resignation, or reject it.

Yahoo's current board would likely reject a resignation by these three directors, should they get more than a 50 percent "against" or "withhold" vote. That's because Yahoo's board and investor activist Carl Icahn recently reached a settlement, ending Icahn's proxy fight before the company's August 1 shareholders meeting, where board members will be elected.

Yahoo, under the settlement, is giving Icahn a seat on the board after the shareholders meeting, and it will then appoint two additional directors to its expanded board of 11 members, pulling from Icahn's former slate of dissident directors and Jonathan Miller. So, the lineup would essentially be eight members of Yahoo's current board and three in the Icahn camp.

So, the applecart could potentially take a tumble if Bostock, Burkle, and Kern each fail to get a majority of the votes cast and the board accepts their automatic resignations. That would leave five members on Yahoo's current board and three in the Icahn camp--potentially narrowing the margin Icahn would need to swing votes his way on company issues. As a result, Yahoo's current board would likely reject any resignations should they arise.

Glass Lewis, however, was not without concerns involving Icahn. In its report, the advisory service noted:

Carl Icahn, chairman of Icahn Enterprises G.P. and CEO of Icahn Capital LP, currently serves on a total of seven public company boards. His total number of directorships will expand to eight once he is appointed to Yahoo's board. We believe that the time commitment required by this number of board memberships may preclude Mr. Icahn from fulfilling his responsibilities to this Company's shareholders. We believe shareholders should monitor Mr. Icahn's ability to devote sufficient time and attention to the Company.

Meanwhile, RiskMetrics is expected to issue its recommendation to its clients either later Wednesday or Thursday, a company spokeswoman said. And Proxy Governance is expected to issue its recommendation by Friday, a spokesman said.

While some folks were enjoying the summer sun and taking a vacation, investor activist Carl Icahn showed that the life of a shareholder activist can be 24-7.

In his blog post Tuesday, Icahn recounts how he spent last weekend hammering out a settlement agreement with Yahoo Chairman Roy Bostock and CEO Jerry Yang, ending a contentious proxy battle between the parties.

Here's what Icahn had to say:

Proxy fights are very expensive and time-consuming. Unlike political elections, where change is often seen, it is unfortunately extremely difficult to take control of a company. By the end of last week, I realized that although many large shareholders supported me and my slate for the board, they were nervous about having a complete change of control. From prior proxy contest experience, I have discovered that a minority position on the board can be also quite effective. Therefore, I determined to attempt to reach an agreement with Yahoo, which had reached out to me several times during the past week to reach a compromise. Many hours were spent over the weekend and I am very encouraged by the conversations I had with Roy Bostock and Jerry Yang. At 5 a.m. on Monday morning an agreement was finally reached. An important provision in the agreement which should not be overlooked is that it provided that I will be offered the chance to serve on any committee established to consider material transactions out of the ordinary course of business. I believe another important aspect of the agreement that should not be overlooked is that:

"...the board has agreed in the settlement agreement that any meaningful transaction, including the strategy in dealing with that transaction, will be fully discussed with the entire board before any final decision is made."

The reason this is meaningful is because it means that I and my two nominees will be a part of the process. What follows is the settlement agreement, the original Yahoo press release, and my farewell note to my slate concerning this proxy fight.

Now that the proxy fight with Yahoo is over, certain constraints concerning my views about corporate governance have been removed and I intend to communicate more frequently in the near future. If you wish to be informed of these communications--please subscribe to the blog. As some of you may have noted, there was an article on the front page of The Wall Street Journal today. Within the next few days--I intend to answer it on the blog.

How did you spend your weekend?

With its bruising proxy battle over, Yahoo stands poised to add a few more deck chairs among its board of directors.

(Credit: AOL)

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 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 , 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."