All Things Digital

BoomTown was right, Facebook has scored itself a “golden geek.” TechCrunch claims that Netscape/Opsware/Ning founder Marc Andreessen will join Accel Partners’ Jim Breyer, Founders Fund’s Peter Thiel and, of course, founder Mark Zuckerberg on Facebook’s board of directors. Which makes perfect sense, really. After all, as BoomTown pointed out back in May, Andreessen is “the man who was Zuckerberg before Zuckerberg was cool.”

Look out Jerry Yang, Carl Icahn now has one fewer distraction as he prepares to propose his slate of dissident board nominees at Yahoo’s Aug. 1 shareholder meeting.

At its own shareholder meeting yesterday, Biogen (BIIB) investors voted to support management’s preferred board candidates and to reject a slate of directors proposed by Icahn, who’s been squabbling with the company’s leadership in call-and-response SEC filings since its failed effort to sell Biogen last year. With 4% of Biogen’s stock, Icahn had been keen on a sale and accused its board of screwing things up when one didn’t occur.

Biogen shareholders obviously didn’t see things that way and seem to have dealt Icahn a knockout blow. “I don’t think there’s any way in which outside observers could fairly criticize Biogen management for the way they handled the sale process,” said Eric Schmidt, an analyst with Cowen in New York. “They can’t be faulted or praised. They have done the best they can with the cards they were dealt.”

Meanwhile, the slate of dissident directors Icahn’s put together for Yahoo (YHOO) continues to attract support. Said one Yahoo shareholder, “He should go ahead. It’s an indicator of the widespread dissatisfaction of shareholders with Yahoo’s management and the board. If nothing else, (it’s) to keep them honest and nobody’s really sure if Microsoft (MSFT) is completely out of the picture.”

Carl Icahn’s a busy guy–busier than usual lately penning broadsides against Yahoo (YHOO). So he can be forgiven the 138-day delay in lauching “Icahn Report,” the blog he announced back in February, and subsequently failed to debut in April.

Earlier today the blog offered nothing more than a placeholder page, but a few moments ago it went live with Icahn’s promised anecdotes on “the desultory state of corporate governance in America.”

And, specifically, Yahoo.

Which seems to figure in many of Icahn’s first few posts–though the company is never mentioned by name.

• Absurdity of Corporate Board Elections
• About CEOs–Anti Darwinian Metaphor–Survival of the Unfittest
• Absurdity of the Poison Pill
• Corporate Democracy is a Myth

Unfit CEOs. Absurd poison pills. Absurd board elections. It’s pretty clear to whom Icahn is referring, isn’t it? Presumably he’s had his site admins ban Yahoo’s IP address from the blog. I’m told comment spam can be a real nightmare.

Yahoo (YHOO) caught a lucky break yesterday when a Delaware Chancery Court judge denied a request by company shareholders to expedite a trial on whether to invalidate Yahoo’s controversial employee severance plans.

The plaintiffs, who claim the severance plan makes any takeover of the company prohibitively expensive, had requested a trial before Yahoo’s annual shareholders meeting on Aug. 1. They argued that the plan, and Yahoo’s recently announced advertising deal with Google (GOOG), might unfairly bias Yahoo shareholders against efforts to replace the company’s board.

But the judge, who complained of the “media maelstrom” shareholders have created around the issue, didn’t buy it. And rather than expediting the case, he said he planned to set a “prompt” schedule for hearing Yahoo’s motion to dismiss it.

As I said, lucky break.

Photo of Judge Wapner from “The People’s Court.”

Carl Icahn has finally broken his silence. The outspoken billionaire investor, who’s been oddly quiet since Yahoo (YHOO) announced its advertising partnership with Google (GOOG), finally commented on the deal this morning, saying it “might have some merit.”

In a brief interview with Reuters, Icahn seemed oddly reserved for someone who, up until last week, had always been ready with an unkind word and an outstretched middle finger for Yahoo and its fumbling leadership. Apparently, holding 59 million shares in a company that’s somehow managed to undermine a merger deal with Microsoft (MSFT) that would have valued it at up to $47.5 billion has taken some of the spring out of his step. “While the Google deal is not the same as an offer of $34.375 per share for Yahoo, I am continuing to study it, and it might have some merit,” Icahn said. “I continue to be extremely disappointed with the Yahoo management, but the Google deal might have some merit and seems to be better than the alternative deal proposed by Microsoft.”

Icahn offered no comment on the future of his proxy fight for the company’s board, though one would imagine he must be having some second thoughts about it now that Microsoft has thrown up its hands in disgust and has apparently walked away from the negotiating table for good. And the “change of control” provisions that allow Google or Yahoo to terminate the partnership they’ve just inked in the event that a majority of Yahoo’s board is replaced at its upcoming annual shareholders meeting in August can’t be sitting well with him either.

But not to worry, dissident Yahoo investor Eric Jackson has a plan that may right the company and prevent its current proprietors from driving down its value once again. He’s urging fellow shareholders to vote for a board slate that includes four directors proposed by fellow activist Carl Icahn and five from Yahoo. “I want Icahn to win outright, but I am putting forward this ‘third option’ because I fear several large investors will worry about the operational abilities of Icahn and his team,” Jackson wrote in an essay entitled “Third Option for Yahoo.”

So who would Jackson like to see elected to Yahoo’s board? From Icahn’s slate he recommends Adam Dell, Lucian Bebchuk, John Chapple and Edward Meyer. And from Yahoo’s existing board Vyomesh Joshi, Robert Kotick, Maggie Wilderotter, Gary Wilson and Jerry Yang.

Jerry Yang? Really?

“Although I have been disappointed with the results of Jerry Yang’s tenure as CEO and hold him accountable for the poor outcome with Microsoft, I believe that–as a co-founder–he should remain on this board,” Jackson explained. “Whether or not he remains as CEO is something for the new board to determine. I frankly hold Mr. Bostock [Yahoo Chairman Roy Bostock] more responsible for the breakdown in talks with Microsoft. He supposedly has much more experience in such deal-making matters than Yang, and I find it puzzling that he would choose not to attend that fateful May 3 meeting in Seattle, which led to Microsoft finally pulling the plug on their offer.”

Carl Icahn’s a little quieter than usual today, isn’t he?

After publicly cataloguing Yahoo’s (YHOO) failures of leadership for the better part of the week, he seems to have fallen silent after what may prove to be the company’s greatest failure of all.

Perhaps that’s because he’s still hard at work penning a letter so full of spleen and vitriol it will melt Jerry Yang’s head like Belloq’s in “Raiders of the Lost Ark.”

Or perhaps it’s because he’s not that worried about the Google (GOOG) deal. After all, it’s got all sorts of things going against it. There’s antitrust scrutiny. And then there are its terms. According the deal’s fine print, Google is free to scuttle the agreement in the event of a “change in control.” And that includes changes of control in the boardroom–exactly the sort of thing Carl Icahn proposes.

The services agreement also permits Google to suspend performance of the services under certain circumstances, including a … change in a majority of the board of directors of Yahoo following an annual or special meeting of stockholders if a majority of the new directors did not serve on Yahoo’s board immediately prior to such stockholder meeting and were nominated or solicited for by Microsoft, Time Warner or News Corp. or, solely with respect to Yahoo’s first two annual or special meetings held after the effective date where the election of a majority of directors is before Yahoo stockholders (but not later than Sept. 1, 2009), by any other person or group.”

Our long national nightmare of unceasing Yahoo-Microsoft headlines is finally over. Shares of Yahoo (YHOO) slipped into the mud this afternoon after the company said it had concluded, “definitively,” whatever spectacularly unrewarding discussions it’s been having with Microsoft (MSFT) without reaching any sort of merger agreement. Redmond, it seems, is no longer willing to pay $33 per share to acquire Yahoo.

Meanwhile, Yahoo and Google (GOOG) moved to complete a search-ad deal.

Dueling statements from Yahoo and Microsoft on the conclusion of their negotiations below. (Carl Icahn’s outraged letter on the whole matter presumably forthcoming…)

Yahoo Announces Microsoft Talks Have Concluded

Yahoo, a leading global Internet company, today announced that discussions with Microsoft regarding a potential transaction–whether for an acquisition of all of Yahoo or a partial acquisition–have concluded. The conclusion of discussions follows numerous meetings and conversations with Microsoft regarding a number of transaction alternatives, including a meeting between Yahoo and Microsoft on June 8 in which Chairman Roy Bostock and other independent board members from Yahoo participated. At that meeting, Microsoft representatives stated unequivocally that Microsoft is not interested in pursuing an acquisition of all of Yahoo, even at the price range it had previously suggested.

With respect to an acquisition of Yahoo’s search business alone that Microsoft had proposed, Yahoo’s board of directors has determined, after careful evaluation, that such a transaction would not be consistent with the company’s view of the converging search and display marketplaces, would leave the company without an independent search business that it views as critical to its strategic future and would not be in the best interests of Yahoo stockholders.

Yahoo remains focused on maximizing value for stockholders by continuing to execute on its strategy of being the ’starting point’ for the most consumers on the Internet and a ‘must buy’ for advertisers. The online-advertising industry is projected to grow from $40 billion in 2007 to approximately $75 billion in 2010, and the company believes it has the right assets, strategic plan, board of directors and management team to capitalize on this growth opportunity.”

Microsoft Issues Statement Regarding Yahoo

In the weeks since Microsoft withdrew its offer to acquire Yahoo, the two companies have continued to discuss an alternative transaction that Microsoft believes would have delivered in excess of $33 per share to the Yahoo shareholders. This partnership would ensure healthy competition in the marketplace, providing greater choice and innovation for advertisers, publishers and consumers.

As stated on May 3 and reiterated on May 18, Microsoft was not interested in rebidding for all of Yahoo. Our alternative transaction remains available for discussion.”

As predictable as the call and response between two chattering squirrel monkeys, the recent dialogue between Yahoo (YHOO) and Carl Icahn. And about as elevated.

In a speech to reporters at the New York Financial Writers’ Association annual awards dinner last night, the billionaire investor–clearly irked by Yahoo’s latest SEC filing–let loose on the company, accusing it of “sinking to a new low.” Yahoo’s severance plan, which Icahn argues was designed to make any takeover of the company prohibitively expensive, is obscene, said the investor. It’s “an insult to our intelligence … a complete, total … I don’t want to use bad words … a travesty,” he added. For the people Microsoft (MSFT) wants to keep, Icahn maintained, the severance plan “will make it easier for them to leave.” And then, just in case anyone was still unclear on Icahn’s view of the company’s leadership, he offered up the following brief performance review:

Yahoo has done terribly. The board has done an abysmal job.”

Mess with the bull, you get the horns. And if Yahoo’s board persists in messing with Icahn, it may get them in the form of a lawsuit. “If they continue with this line,” the investor told Reuters, “I believe they (the board) may be personally liable.”

Shareholders suing Yahoo’s (YHOO) board of directors for its alleged mishandling of the Microsoft (MSFT) buyout offer may find their efforts to pull the company’s controversial severance plan something of a fool’s errand. Because according to a new company filing, their chances of forcing Yahoo to scrap the plan are about as good as their chances of forcing CEO Jerry Yang to use capital letters in his all-hands memos, just like a big boy. Which is to say, middling to lousy at best.

In an SEC filing late today, the company noted that it cannot simply terminate the severance plan, as some shareholders, and one in particular, would like. From Yahoo’s filing:

Can the board simply terminate or cancel the plan now as suggested by Mr. Icahn?
No. Under the terms of the plan, it cannot be terminated once a person has publicly announced the intention to take an action, which if consummated, would constitute a change in control until one month following the abandonment of the potential change in control. The actions covered include, among others, the announcement by any person of an intention to acquire the company as well as a proxy contest to take over a majority or more of the board (such as that announced by Mr. Icahn). Accordingly, the plan can’t currently be terminated or canceled. The plan can be terminated one month following the abandonment of the actions creating a potential change in control.”

Suffice to say, the litigious among Yahoo’s shareholders are not at all pleased with this particular feature of the plan and have filed a motion requesting a trial to remove it before Yahoo’s annual meeting in August. “A prompt trial on the validity of the severance plans is now essential and appropriate,” they argued in a brief filed today, “not least because Yahoo’s board disabled itself from rescinding the severance plans during the pendency of a proxy fight, even if doing so is essential to realizing a favorable deal, and because Icahn’s slate is barred from rescinding the severance plans if it prevails in its proxy contest.”