Yahoo! has postponed its shareholder meeting, even though it announced just two weeks ago the meeting would be held July 3. It now says the meeting will be held "around the end of July," according to an SEC filing Thursday.
But the Internet giant has more than a nasty proxy fight on its hands with billionaire corporate raider, and new Yahoo! shareholder Carl Icahn, who filed an opposing slate of board nominees. Icahn has said that if the proxy board is elected, it will negotiate a deal between Yahoo! and Microsoft.
Yahoo! also must prepare itself for highly contentious, potentially embarrassing shareholder proposals which revisit ugly headlines over Yahoo!'s alleged help in disclosing the identity of a journalist to Chinese communist authorities, who was then jailed for 10 years.
All three proposals, which Yahoo!'s board flatly opposes, could portend a notably ugly and chaotic investor meeting.
Here are the proposals, with my commentary on each following:
*A resolution forcing Yahoo! to fight Internet censorship: The Comptroller of New York City wants Yahoo! to institute policies to better protect data that can identify users in countries that censor the Internet, where political speech is a crime. The comptroller also wants the company to avoid censorship of all kinds, and to resist overseas demands for censorship, using any legal means necessary. It also wants Yahoo! to tell users how it is disclosing their data.
The board's response: It punts on this one. While it says Yahoo! is "deeply concerned" about government censorship, it thinks that instead a continued dialogue with hostile countries is the best path, calling engagement "a powerful force in promoting openness and reform."
It says Yahoo! "believes private industry alone cannot effectively influence foreign government policies on issues like the free exchange of ideas and open access to information," and instead has established "a cross-functional team of Yahoo! employees" to deal with the "on a global basis" as well as "fellowship programs with two universities to promote the pursuits of journalists from press-restrictive countries and scholars exploring the link between global values, the Internet, and communication technologies."
Commentary: A lily-livered response at a time when Internet users are facing gunshots to their heads just for speaking out. If you think latte-drinking, croissant-eating, bicycle-riding Internet executives or college students can take on thugs in North Korea, China, Syria and Iran, then you are the web surfer in the plastic bubble.
Just last fall, Yahoo! chief executive Jerry Yang had to endure heated grilling in testimony before Congress over the fact that Yahoo! evidently provided information to Communist authorities in China that was allegedly used to identify and jail for 10 years Shi Tao, a 37-year-old journalist, for leaking "state secrets."
Shi Tao's violation: He was jailed for sending on to foreign websites an e-mail from the ruling Communist Party warning journalists not to cover the 15th anniversary of the Tiananmen Square massacre in 2004.
The Congressional panel also issued a stinging rebuke to Yahoo! for not giving full details to its probe, saying Yahoo! had been "at best inexcusably negligent" and at worst "deceptive" in evidence given to the House Foreign Affairs Committee last year.
Yahoo!'s Michael Callahan originally told Congress he did not know why China wanted the reporter's details, then reportedly backed off that statement, saying information came to him after the fact. Yahoo! has previously said it had to comply with Chinese laws to operate in the country.
*A plan for a new Yahoo! board committee on human rights: An individual investor, John C. Harrington has proposed that Yahoo! establish a new Board Committee on Human Rights which would review and make policy recommendations regarding human rights issues raised by the company's activities and policies.
The investor cites the controversial, and dangerous, decision by Yahoo! to allegedly disclose Tao's identity to Communist authorities in China.
Harrington says that "of the major Internet search engines operating in China, Yahoo! censored more terms, according to a limited test conducted by Reporters Without Borders."
He adds that "in defining human rights, the new committee could use as a benchmark the "US Bill of Rights and the Universal Declaration of Human Rights" laid out by the United Nations.
The board's response: Yahoo!'s board opposed an identical proposal brought last year, and stockholders overwhelmingly rejected the proposal, with over 95% of the votes cast voting against it. The board says it "continues to oppose the proposal because the Company already has policies that advance fundamental human rights issues."
Commentary: Tell that to Shi Tao. And his mother and father, as well as the rest of his family.
*A new "pay-for-superior-performance" plan: Brought by The United Brotherhood of Carpenters Pension Fund, an investor in Yahoo!, the pension fund says executives are overpaid versus Yahoo!'s rivals, that their pay is not tied to performance criteria, and that the executives should not simply get time-vested stock awards.
It wants Yahoo! to "adopt a pay-for-superior-performance" plan that sets annual and long term incentive compensation targets, which it says is now pegged "at or below" the median levels at Yahoo!'s peer or rival companies.
The pension fund gives this parting shot: "We believe the failure to tie executive compensation to superior corporate performance has fueled the escalation of executive compensation and detracted from the goal of enhancing long-term corporate value. Post-employment benefits provided to executives from severance plans and supplemental executive pensions exacerbate the problem."
The board's response: It says the pension fund didn't take into account the fact that Yahoo! chief executive officer Jerry Yang gets a nominal annual salary of only $1, and that last year he did not receive any bonus or other compensation and was not granted any stock options or other long term equity incentive awards. And it says that besides, Yang is one of Yahoo!'s largest stockholders, so a substantial portion of Yang's net worth is already tied to the performance of the company's stock.
It also says for other executive officers, "greater than 88% of each executive's annual direct compensation already depends upon the achievement of financial goals, individual performance and/or Yahoo!'s stock price."
Commentary: The executives are richly paid, period.
Yes, Yang gets a $1 token annual payment he has accepted for years, but that's because the Internet company which he co-founded already has made him a billionaire. Yang's stake in Yahoo by some estimates is currently worth $1.5 billion. And Yang isn't the only Silicon Valley billionaire who work for a $1 salary each year. Apple CEO Steve Jobs and Google co-founders Larry Page and Sergey Brin all do, too.
Also, the Sunnyvale Internet firm handed more money to its top executives than any other Bay Area public company in 2006, according to The San Francisco Chronicle's annual survey of executive pay at 200 local companies. Yahoo Inc.'s top five executives raked in $135 million in that year (mostly in restricted stock and stock options), though down from $155 million the year before, according to calculations from Equilar, a research firm that specializes in executive compensation.
In fact, the paper says that of the more than 1,000 executives in the survey, four of the seven highest-paid executives worked at Yahoo.
And former Yahoo! chief executive Terry S. Semel, who stepped down in June 2007, got $230.6m in salary and stock gains in 2005.