NEW YORK — Yahoo shareholder SpringOwl is demanding the Web company’s board replace CEO Marissa Mayer.
In a presentation the investment firm sent to the board over the weekend, SpringOwl has outlined a 10-step plan for turning around Yahoo’s troubled business with step No. 1 calling for Yahoo to bring in a new CEO.
The New York City-based investment firm also called for Yahoo to dramatically reduce its headcount to 3,000 people, down from close to 12,000 currently, and to replace certain directors.
“The board likely feels compelled to keep the current CEO because of the high compensation plan they previously granted to her but new leadership is needed,” SpringOwl wrote in its 99-page presentation.
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SpringOwl cited the billions Mayer has spent on acquisitions like Tumblr since she took the helm in 2012. “She bought it at the top and didn’t properly invest in the asset to make the most of it,” SpringOwl wrote of the 2013 Tumblr purchase, which cost Yahoo $1.1 billion.
Yahoo shares (YHOO) fell about 1% on Monday. They’re off 35% this year.
A Yahoo spokesperson declined to comment. Last week, Yahoo Chairman Maynard Webb said the company’s board “has complete confidence in the management team and the leadership” of the company.
SpringOwl’s managing director, Eric Jackson, who has battled with Mayer over Yahoo before, sent the presentation directly to Webb, he said. Jackson did not return a request for comment on the size of SpringOwl’s stake in Yahoo.
In the presentation, SpringOwl also said it disagrees with shareholders who want Yahoo to sell its core Internet businesses, like email and online search, and would prefer instead to first turn the business around.
Hedge fund Starboard Value has said it would like to see Yahoo focus on a sale sooner rather than later — although Yahoo’s talk of a tax-free spinoff may be having a chilling effect on bidders, USA TODAY reported Sunday.
Yahoo’s Mayer and Chairman Webb have said they, too, want to turn focus on the company’s turnaround, even as they weigh a tax-free spinoff of Yahoo core assets in an effort to separate them from Yahoo’s 15% stake in Chinese e-commerce company Alibaba (BABA).
But SpringOwl’s presentation makes it clear that the firm doesn’t think Mayer is the right person to lead the charge. Mayer is on a brief maternity leave after giving birth to twins.
Last week, Yahoo announced a new plan for separating its $32 billion Alibaba stakefrom Yahoo’s other businesses amid concerns that the Alibaba stake has been overshadowing the value of Yahoo’s other businesses for years. The company is considering doing this through a tax-free spinoff of Yahoo’s Web businesses, which could take a year to complete.
That will also give Yahoo time to focus on its turnaround plan, Webb said.
“We believe that we are significantly undervalued and we believe that the best way to unlock that value is by continuing to focus on the turnaround of our operating business and better execution there,” Webb told CNBC on Wednesday.
Date: December 14, 2015
