Yahoo! directors screwed me over, says Carol Bartz

Carol Bartz, who was sacked over the phone by Yahoo! chairman Roy Bostock on Tuesday, said the board was afraid of widespread criticism on Wall Street, and fired her to show they were not “doofuses”.

“The board was so spooked by being cast as the worst board in the country. Now they’re trying to show that they’re not the doofuses that they are,” she said.

In an interview with Fortune magazine, Bartz, who intends to remain a director at Yahoo!, also told how she challenged Bostock for giving her the news by telephone, apparently reading from a prepared statement: “I said, ‘Roy, I think that’s a script… Why don’t you have the balls to tell me yourself?’”

The call put an end to her rocky 19-month tenure at Yahoo!, marred by stagnation and a bitter rift with its Chinese partner, Alibaba Group. The final straw came when it emerged that Yahoo! had not realised that there would be a financial impact on its $1 billion  stake in joint venture Alipay when there was a change of ownership.

On Thursday Daniel Loeb, a major technology investor whose hedge fund Third Point has a 5.1% stake in Yahoo!, cited the “Alipay debacle” in a litany of failings as he called for the heads of Bostock and three other directors.

In a letter to the chairman, he accused Yahoo!’s board of lacking courage and “destroying” shareholder value, as he demanded a wholesale boardroom shake-up.

“From the failed Microsoft sale negotiations, to a subsequent bungled and disappointing search deal with Microsoft, through a series of misguided chief executive selections, and most recently the Alipay debacle, this board’s failures have destroyed value for all Yahoo! stakeholders.

“Bartz’s exit and [finance director] Morse’s elevation to interim chief executive makes him Yahoo!’s fourth chief executive in four years and further demonstrates the poor corporate governance Yahoo! investors have been saddled with for too long,” he wrote.

Yahoo! turned down a $31-a-share offer from Microsoft in 2008 — a decision that is now “widely recognised [as] a gross error,” Loeb said. Yahoo! shares were up 41 cents at $14.02 in late trading on Thursday.

Loeb also lambasted the board for allowing Bartz to run the company for as long as she did. “We fail to understand why this decision was so long in coming given her abysmal performance over the last two-and-a-half years. During this period, Bartz’s poor decision-making and communication skills publicly alienated the company’s highly respected Asian partners, as well as its shareholders, sell-side analysts, bloggers, customers and employees.”

He added “merely” appointing a new chief executive “yet again” would not be enough and named three non-executive directors besides Bostock who should step down from or be forced off the board.

Loeb called for the heads of Arthur Kern, founder of US radio business American Media, and Vyomesh Joshi, an executive vice-president at Hewlett Packard, claiming they “have stood silently by during these last five years of woeful performance”.
He also named Susan James, on account of her “close relationship” with Bartz.