I'm Sorry Ms. Yahoo, Eric Jackson's Plan is for Real

Jan. 10, 2007 4:50 AM ETAltaba, Inc. (AABA)
David Neubert profile picture
David Neubert

Sorry Warren Buffet, I still love you but Eric Jackson is my new investor hero.yahoo sign This guy is leading a campaign of individual investors from his blog to push for a restructuring of Yahoo (YHOO) for the benefit of shareholders. In an embedded video posted on YouTube on his blog, Mr. Jackson describes a ten point plan to increase returns for shareholders and remind Yahoo Management who they work for. He then asks shareholders to either buy shares or use their current holdings and commit to vote them with his proposals.

This is shareholder activism at its most democratic level.

click image to stream video

Congratulations Mr. Jackson, you are my new investing hero. Now if only you had $37 billion to commit to philanthropy.

The seven point plan is very reasonable. Mr. Jackson even proposes creating the plan in a wiki . That may be a bit far-fetched as an idea but I support his radical idealism. You never know what kind of shareholder democracy, added value and profits to shareholders may ensue.

1. Appoint Susan Decker CEO immediately; implement pay-for-performance for all YHOO execs going forward.
2. Restructure the board immediately with more active outside directors who own stock; 10 year term limits for directors should also be introduced.
3. Set up a special committee of the board to study and then articulate the company's vision/strategy and start executing it.
4. Step up the pace of the $3B stock repurchase plan announced in October 2006.
5. Begin a cash dividend immediately.
6. Reduce overlapping internal divisions (e.g., del.icio.us/MyWeb, Flickr/MyPhotos.)
7. Remove anti-takeover provisions which are not shareholder-friendly.

My take on his plan:

1. Why Susan Decker as CEO? I would want to know what he means by pay for performance. He should probably explain that. I hope it has earnings and cash flow targets instead of just share price.
2. Amen
3. More Board involvement is better.
4. Amen.
5. Dividends instill discipline on management. But a small dividend. This company still needs to invest cash in growth.
6. Why has this taken so long?
7. Always a good idea.

I plan to support the proposal with my shares. I agree with most points and I'm happy to support the little guy.

Disclosures and Confessions: I own Yahoo and plan to pledge my shares to the campaign. However, if the shares rise above $35 I'm likely to start selling. I'm short Jan 2008 35 strike calls against half my position of YHOO and am also short Jan 2008 30 strike puts. I like Yahoo!. I use their email and use MyYahoo as my homepage. I make extensive use of Yahoo Finance . I also like their newsreader in yahooMailBeta. I also own Mr. Buffet's company Berkshire Hathaway (BRK.A).

YHOO 1-yr chart:

YHOO 1-yr chart

This article was written by

David Neubert profile picture
David Neubert is a self-employed investor who says he is done working with corporate Wall St. "Now I'm managing money for people I like, teaching, serving on some foundation boards and trying to start some socially responsible financial blogs," explains David. Often contrarian, his analysis attempts to provide a fresh and independent understanding that only an ex-Wall Street trader would possess. Previously, he worked in management positions at Morgan Stanley and Lehman Brothers and as an analyst and trader for Chemical Bank (now JP Morgan Chase). David is a world traveler who loves to blog about his exploits whether he's roughing it at the Burning Man Festival in the Nevada desert, grooving at the New Orleans JazzFest or taking in alt-theater at the Edinburgh Fringe Fest. He currently splits his time between New York City and Massachusetts. Visit his site: Neubert's Trades (http://thepanelist.com/blogcategory/Neuberts_Trades/)

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