Missing: 200 Million Yahoo! Shares from Last Friday's Annual Meeting

The press release following last Friday's Yahoo! Annual Meeting suggested that shareholders had more strongly supported Yahoo!'s board compared to 2007. However, there appear to be 200 million Yahoo! shares (on average) which were not counted in this year's election compared to the 2007 and 2006 votes. If those 200 million shares had been voted for Icahn's proxy (before he called a truce with Yahoo!), they would have been thrown out. If you assume those votes would have gone "against" most or all of the incumbent Yahoo! board, Friday's results might have been just as or more negative this year compared to last.

2008 Results

As per Friday's press release from Yahoo!, only 1,046,095,584 out of 1,381,008,701 possible share votes (or 75.8%) were counted in this year's election. As you go through the release, you quickly notice that each of the total votes cast for each director and proposal sum to exactly 1,046,095,584 (or just over a billion) votes.

So, for example, Roy Bostock received 832,023,657 "for" votes and 214,071,927 "withhold" or "against" votes for a total of 1,046,095,584. This means, according to the press release, he received 79.5% of votes "for" his re-election and 20.5% of votes "against" his re-election.

2007 Results

According to Yahoo!'s Q207 10-Q, which came out in August 2007, Roy Bostock received 828,803,221 shares voting "for", 376,632,150 shares voting "against" out of a total 1,205,435,371. That means he received 68.8% of votes "for" his re-election and 31.2% of votes "against" his re-election.

However, it's notable that 159,339,787 fewer votes were cast this year compared to last year's vote on Roy Bostock.

It seems odd that fewer (13.2% fewer) shares would be voted this year compared to last, when there's been such additional scrutiny on the company in the wake of the dealings with Microsoft and Carl Icahn. With the additional press, you would expect there to be more shares voted this year compared to last.

If you assume those 160 million shares were voted for Icahn and would have been voted against Bostock's re-election, he would have received 832,023,657 "for" votes and 373,411,714 "withhold" or "against" votes for a total of 1,205,435,371. This means that, this year, he would have received 69.0% of votes "for" his re-election and 31.0% of votes "against" his re-election -- almost exactly the same "protest" vote as last year.

2006 Results

If you go back to the Q206 10-Q from August 2006, you see that Roy Bostock received 1,261,316,357 shares voting "for" and 14,859,244 shares voting "withheld" out of a total 1,276,175,601 shares. That means, in that year, he received 98.8% of votes "for" his re-election and 1.2% of votes "against" his re-election.

But, again, there were 230,080,017 fewer votes (18.0% fewer) cast this year compared to this 2006 vote on Roy Bostock.

If you assume these missing shares would have been voted against Bostock's re-election, he would have received 832,023,657 "for" votes and 444,151,944 "withhold" or "against" votes for a total of 1,276,175,601 (and keep in mind that Friday's press release from Yahoo! said there were 1,381,008,701 shares outstanding as of the record date, June 3, 2008). This means that, this year, Bostock would have received 65.2% of votes "for" his re-election and 34.8% of votes "against" his re-election -- a higher "protest" vote than last year.

You could also make the argument that every possible vote that was going to be cast "for" Mr. Bostock's election was counted in Yahoo!'s number of 832,023,657 for this year. That means there were 548,985,044 shares (or 39.75%) out of the total 1,381,008,701 which did not vote "for" his re-election. That is very close to the 42% of votes which were cast against Michael Eisner's re-election at Disney the year he fought Roy Disney.

The other Yahoo! directors are missing similar numbers of votes compared to 2007 and 2006.

What this means is that we have roughly 200 million Yahoo! shares (averaged between 2007 and 2006) which were not counted in the 2008 results which Yahoo! reported last Friday afternoon.

Where are these missing shares? Were they intended to be counted against the re-election of Yahoo!'s board and not?

Yahoo! needs to account for such a large discrepency between this year's numbers and the past two years'. It's quite possible that Yahoo! shareholders did vote in record numbers against the Yahoo! board at this year's election but these results are not being shared openly.

I call on Yahoo! to immediately appoint a third-party to review and then report back to shareholders exactly how all the 1.4 billion shares outstanding on the June 3rd record date were voted during this election.

If the results truly indicate that this board was re-elected, shareholders can and will accept that. But Yahoo! shareholders expect and deserve to know exactly how their shares were voted with accurate numbers.

Disclosure: Author owns shares of YHOO

Comments

[udirtyrat:]

You can bet Yang & Co. will come up, like magic, with some mumbo jumbo reason that just won't make any sense. If the BOD DID get that high percentage of "for" votes I'd figure that can't at this stage say otherwise. Everyone is LOSING their shirts, what more can happen. If Miller has an exodus of shareholders selling in his fund the loss will be catastrophic.

2008 Aug 05 10:36 AM

[StrictNon-C...:]

If people were betting on the takeover going through at a price and are losing their shirts because they jumped in for the kill and expectation of making a lot of money in a short time, they're damned fools and deserve to lose that money, udirtyrat. Carl Icahn has earned his loss, and so, too, all the short-term speculators. Of far more concern for Yahoo! are the employees with stock options that they'd like to see around for the long haul, that have little reason to stay.

Believe it or not, Yahoo! isn't losing money: the only thing being lost at Yahoo! right now is investor and employee confidence in them. By the measures of most companies in the world, they're suitably profitable, but when compared to the likes of Google, they seem like they're not doing well.

I'm hoping by your comment that you were one of those short-term fools that lost a lot of money because you counted on something you just can't count on: what people will do. If you can't tolerate the risk, you shouldn't jump into the deep end of the pool with all the sharks that haven't been fed recently. If you can, just shut up about it, because that's the nature of such things: they're inherently risky.

2008 Aug 05 01:05 PM

[jack dee:]

Poster of clearly has zero idea what He/She is talking about.

Yahoo has a duty to shareholders, NOT staff. Staff are paid money to work there. Shareholders OWN the company 100%. Shareholder have the right to expect Yahoo to act in the longterm interest of shareholders, whoever they might be. If Yahoo does not like this, they can buy back all the shares, and take the company private. And then they can act in the interest of the new owners.

As to short term investors/gamblers, yeah fine whatever.

Employees with options? Ha I sure hope you are one of them, HA HA.

2008 Aug 05 04:46 PM

[AdamC:]

Yahoo owed their allegiance to the shareholders to make money for them in the long term but not to sell off the company for a one time profit. If the shareholders feel that Yahoo is not doing things to their interest they can sell their Yahoo shares and move on.

2008 Aug 06 12:55 AM

[TS inCT:]

I received proxy materials the same day as meeting, August 1, letter with it was dated July 28, and I was prevented from voting as the meeting had begun when I tried to vote online as soon as I received proxy materials. Probably happened to others. I would have voted against Yang et al.

2008 Aug 06 10:02 AM