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With a proxy fight possible, Yahoo adds two board members

Rex Crum Tribune News Service

SAN JOSE, Calif. – The changes are continuing at Yahoo.

Early Thursday, Yahoo said it added two members to its board of directors. Catherine Friedman, a former managing director at Morgan Stanley, and Eric Brandt, former chief financial officer at Broadcom, joined the company’s board, effective March 8, Yahoo said in a statement. The additions of Friedman and Brandt bring the size of Yahoo’s board to nine members.

Officially, Friedman and Brandt replace Charles Schwab and Max Levchin, who resigned from Yahoo’s board in December. Maynard Webb, Yahoo’s chairman, said Friedman and Brandt have become board members “at an important juncture in Yahoo’s transformation.”

Webb isn’t understating Yahoo’s situation. The company was reported to meet this week with members of Starboard Value, a hedge fund that has threatened a proxy fight for control of Yahoo’s board at the company’s next annual meeting.

Robert Peck, who covers Yahoo for SunTrust Robinson Humphrey, said that it’s hard to see Yahoo’s move as anything other than negative, and that it basically signals that the company is going to be faced with a proxy fight with Starboard.

“The board is now comprised of seven independent directors (out of nine total) and it is unclear that Starboard would be willing to take anything less than five seats for control of the board,” Peck said. “Why these directors would want to join ahead of a potential messy proxy battle has us a little perplexed.”

Friedman and Brandt are also joining Yahoo’s board as the company is in the midst of a big restructuring. Yahoo is cutting 15 percent of its workforce, and it has hired investment banks to explore so-called “strategic alternatives” that may include selling its core Internet assets.

Chief Executive Marissa Mayer is also under pressure to spin off Yahoo’s stake in Chinese Internet giant Alibaba. Chief Financial Officer Ken Goldman also told a tech conference that Yahoo is exploring the sale of $1 billion to $3 billion worth of its technology patents in order to raise cash.