The Internet company on Wednesday resolved its battle with activist investor Starboard Value, under which four new independent directors nominated by Starboard — Tor Braham, Eddy Hartenstein, Richard Hill and Starboard CEO Jeffrey Smith — will join the board effective immediately.
Starboard, unhappy with Yahoo’s financial performance under Mayer, had previously nominated a slate of nine candidates, seeking to unseat the existing board members.
The board shakeup averts what could have been an ugly proxy fight, and it also increases the likelihood of a Yahoo sale given Starboard’s advocacy of the move.
Under the agreement, Starboard’s Smith will also join the strategic review committee, which is currently evaluating bids for Yahoo’s core business. In addition, Starboard, which owns about 1.7% of Yahoo’s outstanding shares, has withdrawn its director nominees for the Yahoo board as part of the agreement.
“I am pleased that we were able to reach a constructive agreement with Yahoo to add new independent directors to the Yahoo board,” Smith said in a statement. “We look forward to getting started right away and working closely with management and our fellow board members with the common goal of maximizing value for all shareholders.”
Yahoo bidders in the first round have reportedly included Verizon; YP Holdings, the AT&T-backed ad company formerly known as YellowPages.com; private-equity firm TPG; and a consortium that includes Bain Capital, Vista Equity Partners and Ross Levinsohn, the media exec who was Yahoo’s interim CEO before Mayer was hired in 2012.
At Yahoo’s annual meeting in June, two incumbent directors — former Wal-Mart CEO Lee Scott and Sue James, a former Ernst & Young partner — will not stand for re-election, so that following the meeting the board will have 11 members.
“We are pleased to welcome these four new highly respected, independent directors to our board,” Yahoo chairman Maynard Webb said in a statement. “The additional board members will bring valuable experience and perspectives to Yahoo during this important time for our company.”
Added Mayer, “This constructive resolution will allow management and the board to keep our focus on our extremely important objectives. Management is looking forward to working with the entire board, including the new directors, to maximize shareholder value.”
The four new Starboard-backed directors are: Tor Braham, former Deutsche Bank Securities managing director and global head of technology mergers and acquisitions; Eddy Hartenstein, former CEO of Tribune Co., chairman and CEO of DirecTV and publisher and CEO of the Los Angeles Times Media Group; Richard (Rick) Hill, former chairman of Tessera Technologies and CEO of Novellus Systems; and Smith.
In March, Yahoo appointed two independent directors to its board: Catherine Friedman, former managing director of Morgan Stanley, and Eric Brandt, former CFO of Broadcom. That came after the exit of two Mayer allies from the board, Charles Schwab, chairman of the Charles Schwab Corp., and PayPal co-founder Max Levchin.