Yahoo Inc, whose shares fell 65 percent since spurning Microsoft Corp’s US$44.5 billion takeover bid, could find hiring a replacement chief executive officer more difficult while “chief Yahoo” Jerry Yang (楊致遠) works down the hall.
Yang, 40, agreed to step down as CEO and resume his former advisory role on Nov. 17 after rejecting Microsoft’s bid. The prospect of succeeding the Yahoo cofounder may not appeal to candidates fearful of second-guessing, said John Challenger, CEO of Challenger, Gray & Christmas Inc, a Chicago executive-placement firm.
“There’s certainly the potential for trouble,” said Heath Terry, an analyst at Arlington, Virginia-based FBR Capital Markets Corp who has an “underperform” rating on the shares. “In the minds of Jerry, most of the board and employees, this is still Jerry’s company.”
Taiwan-born Yang will serve as CEO until a new one is hired, said Kim Rubey, a company spokeswoman. He wasn’t available for comment, she said.
Yang’s full-time job as chief Yahoo focuses on global strategy, products and technology, a company blog said. He would also continue as a Yahoo board member.
Mozilla Corp’s Mitchell Baker, Quiznos Corp’s Gregory Brenneman and Hasbro Inc’s Alfred Verrecchia are among 216 CEOs stepping down this year and remaining with their companies in another capacity, Challenger said in a survey last month. This was 22 percent fewer than last year and 40 percent under 2006, the study found.
“Boards are more assertive,” said Challenger, 53. “They want to move the person out.”
More than 90 of those who stayed were named chairman or cochairman. Challenger’s study reported that 1,257 CEOs of publicly traded and closely held US companies lost their jobs this year, 10 percent more than last year.
The higher number reflected the economic slowdown and falling stock prices, Challenger said.
The possibility for interference increases when the top manager who stays on is also a founder such as Yang, said Allen Geller, managing director of Raines International, a New York-based executive-search firm.
“Think of it as Big Brother watching,” he said. “That’s what it could be like.”
The path to Yang’s removal as CEO began in February after he rejected Microsoft’s US$31-a-share offer, a 62 percent premium to Yahoo’s share price at the time. Yang said the company was worth more.
Carl Icahn and other shareholders pushed for Yang’s resignation as prospects for the deal waned. The Redmond, Washington-based software maker reiterated on Nov. 19 it wasn’t interested in buying the company.
“Yahoo’s problems are bigger than Jerry Yang,” said James Friedland, an analyst with New York-based Cowen & Co who rates the shares “neutral.”
The next CEO could have to restructure the company for a sale, he said. That’s “going to be a very un-Jerry Yang-like person.”
News Corp president Peter Chernin and former AOL CEO Jonathan Miller were among potential candidates for Yang’s job, said Laura Martin, an analyst with Soleil Securities Corp in New York. Dan Rosensweig, a former Yahoo operations chief, could also be tapped, UBS analyst Ben Schachter said in a recent report.
Yahoo president Susan Decker was also a candidate, company spokesman Brad Williams said.
Any “strong successor” would require Yahoo to provide “a set of conditions to give him or her power,” Challenger said. “If not, it will be hard for Yahoo to attract the very best people.”