Investor Groups Pressure Yahoo To Act Soon: Here Are Their Proposals

The demands from SpringOwl Asset Management and Canyon Capital Advisors reflect shareholders’ frustration with Yahoo CEO Marissa Mayer’s inability to revive the company’s revenue growth after three-and-half years on the job.

Some of Yahoo’s other investors don’t think much of the plan the company unveiled last week to spin off Yahoo’s core business instead of its Alibaba stake.

In a presentation the investment firm sent to the board over the weekend, SpringOwl has outlined a 10-step plan for turning around Yahoo’s troubled business – with step No. 1 calling for Yahoo to bring in a new CEO.

The wide variance between the proposals put forth by Canyon Capital, SpringOwl and Starboard Value LP, the activist investor who has pressured Yahoo over the past year, highlights the different directions the Internet business could go if it chooses to abandon Ms. Mayer’s turnaround.

Many analysts and observers have commented that Mayer took on an impossible task of turning around Yahoo, which was already a lost cause by the time she became CEO.

The decision marked a U-turn on a previous plan to spin off Yahoo’s vast holdings in e-commerce giant Alibaba, which could have exposed it to a huge tax bill.

The presentation recommended replacing some members of Yahoo’s board, along with Mayer, and included a list of traits to seek in a new chief executive.

Although Mayer had promised that Yahoo will provide details on the new reverse spin-off at the company’s upcoming fourth quarter financial meeting, Canyon Capital said Yahoo’s current failure to provide “any clear details in terms of analysis, process or timing” was concerning.

Yahoo has not yet commented on the new turn of events. The amount of money that Yahoo would get if it sells now would be less than if its business improves, Jackson said, adding his firm would consider a proxy battle.

The fund does not have a major shareholding in the company, but he has met several of the company’s largest investors to build support for his plan.

“Requiring shareholders to continue to wait for definitive action for another year or more-and extending the tenure of senior management-while the company evaluates this reverse-spin is simply unacceptable”, the investor wrote in its letter.

Mayer’s total compensation, if she stays for a full five years at Yahoo, will be $365 million, Jackson says in his presentation, citing SEC filings.

Last week, Yahoo announced a new plan for separating its $32 billion Alibaba stake from Yahoo’s other businesses amid concerns that the Alibaba stake has been overshadowing the value of Yahoo’s other businesses for years. But in a sign that many observers took as a signal that Yahoo is open to a sale, Mr. Webb said that “the board has a fiduciary duty to entertain any offers”.

Yahoo’s board said last week that it is not actively exploring a sale.