Starboard Value started a proxy fight to oust the entire Board of Yahoo! Inc. (NASDAQ:YHOO) including its CEO Marissa Mayer, who has been struggling to maneuver the company towards growth and profitability since 2012.
The activist hedge fund owns approximately 1.7% of the outstanding shares of the company. Its investment in Yahoo is worth around $570 million, making it one of the company’s largest shareholders.
Starboard has been pushing for changes in the company over the past few years. Earlier this year, the activist hedge fund demanded Yahoo to change its leadership, execution, and strategy. It also recommended selling its core internet business.
The activist hedge fund launched the proxy fight after Yahoo appointed two new independent directors. Currently, the company is working forward to auction its core internet business.
Yahoo Board failed to deliver results for shareholders
In a letter to Yahoo shareholders on Thursday, Starboard said it would nominate nine highly-qualified directors to Yahoo’s Board during its 2016 Annual Meeting. The activist hedge fund said, “It is unfortunate that that this action is necessary.”
Starboard emphasized that a” significant change is desperately needed to hold management accountable and properly oversee any operational turnaround plan, separation, or sale process.
The activist hedge fund wrote, “We have been extremely disappointed with Yahoo’s dismal financial performance, poor management execution, egregious compensation and hiring practices, and general lack of accountability and oversight by the Board.”
Starboard believes that the current Board is incapable of making decisions for the best interest of shareholders. The activist hedge fund said the Board “lacks leadership, objectivity, and perspective” and “have repeatedly failed shareholders.”
Starboard still hopes to reach an agreement with Yahoo
Starboard is still open to continue its discussions with Yahoo to reach a mutually agreeable resolution that would allow its involvement in the company’s strategic review process to ensure a good outcome for shareholders.
“We believe our continued involvement is crucial to ensure a full and fair sale process and to put the best possible Board in place in the event a transaction for the core business is not achieved in the near-term,” according to the activist hedge fund.
Yahoo issued a statement indicating that its Nominating and Governance Committee will review the proposed director nominees of Starboard and will respond in due course.