BUSINESS
06/23/2011 06:05 EDT | Updated 08/23/2011 05:12 EDT

Carol Bartz, Yahoo CEO, Wins Board Endorsement, Despite Performance Anxiety Among Shareholders

CP

THE CANADIAN PRESS -- SAN FRANCISCO - Yahoo Inc. Chairman Roy Bostock sought to defuse speculation about CEO Carol Bartz's job security at the Internet company's annual shareholders meeting Thursday only to have it ignited again at the end of the session by an exasperated investor.

After Bostock opened the meeting with an endorsement of Bartz's performance, the unhappy investor ended it with a five-minute condemnation of Yahoo's CEO and the entire board of directors.

The investor identified himself as someone who personally owns some Yahoo stock and advises funds that own several million of the company's shares. The Associated Press couldn't verify his identify because Yahoo banned reporters from the meeting held at a Santa Clara hotel, telling the media to listen to a webcast of the event instead.

During his unflattering critique, the investor described Bartz as a "lame duck" who should be immediately bought out of a four-year contract that expires in January 2013. He also called upon Yahoo's board to consider a variety of dramatic steps, including breaking up or selling the company to lift the stock. Yahoo's shares have been lagging the rest of the market for so long that Bartz still hasn't hit any of the price targets set for her when she was hired nearly 2 1/2 years ago.

"It's time for a sense of urgency," the investor said.

Bartz thanked him for his opinion and then added, "That was certainly a downer." No other shareholder lambasted Bartz during the 75-minute meeting.

Before the question-and-answer period, Bartz defended the steps she has taken to streamline Yahoo's operations and focus the company on delivering more services that will keep its audience of more than 600 million people on its website for longer periods. Sounding a familiar theme of her tenure, Bartz also asked for patience.

"Companies don't' turn around just because someone wants them to turn around," she said. "They turn around through hard work."

In his opening remarks, Bostock made it clear he intends to give Bartz more time to finish what she started.

"This board is very supportive of Carol and this management team," Bostock said in his opening remarks. "We are confident that Yahoo is headed in the right direction."

Bartz, 62, has boosted Yahoo's earnings by cutting costs during her first 2 1/2 years as CEO, but so far hasn't been able to revive the company's revenue growth, even amid an upturn in Internet advertising that has enriched rivals Google Inc. and Facebook.

The financial lethargy has dragged down Yahoo's stock, which has been trading in a narrow range since Bartz's arrival while the market values of many other Internet companies have been soaring.

Yahoo shares fell 15 cents to close at $15.08.

When she was hired in 2009, Bartz received 5 million stock options that won't start vesting until Yahoo's stock closes at $17.60 or higher for at least 20 consecutive trading days.

It looked like the shares might remain above that threshold until last month when Yahoo disclosed a surprising move that threatens to diminish the value of its 43 per cent stake in the Alibaba Group, one of China's most promising Internet companies.

The investment suddenly looked less golden after Yahoo announced Alibaba had spun off its payment service, Alipay, into a company controlled by its CEO, Jack Ma, without compensating Yahoo.

Yahoo's stock price has plunged nearly 20 per cent since the May 10 disclosure of the Alipay spinoff.

Echoing remarks she made at a meeting with analysts a month ago, Bartz told shareholders Thursday that Yahoo is encouraged by the negotiations to compensate Yahoo for the loss of Alipay in its Alibaba investment.

Bartz didn't address unconfirmed media reports that Yahoo is interested in buying Hulu, a service that streams television shows on the Internet. Hulu, whose current owners include Walt Disney Co., News Corp. and Comcast Corp., confirmed it got an unsolicited buyout offer without identifying the bidder.

The investor who spoke out against Yahoo urged the company not to buy Hulu unless the deal meant that Hulu's CEO, Jason Kilar, would replace Bartz.

Bostock faced stinging criticism three years ago when he was just starting out as Yahoo's chairman and the company balked at a chance to sell itself to Microsoft Corp. for $47.5 billion, or $33 per share.

Most shareholders are still backing Bartz and Bostock. Based on a preliminary count announced Thursday, Yahoo said about 80 per cent of shareholders favoured their re-election to the board.

After the squandered Microsoft opportunity, only about 60 per cent of shareholders backed Bostock's election to the board in 2008.