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Activist: Yahoo! Vote Doesn't Add Up

Yahoo!'s (YHOO - Get Report) shareholder vote last Friday had two scandals attached to it. The first you've likely heard about as it involved Yahoo! dramatically under-reporting (by more than 50% in some cases) how many of its shareholders voted "against" the re-election of several directors, including CEO Jerry Yang and Chairman Roy Bostock. However, you likely haven't heard of the second, which involves about 200 million shares (or 15% of the eligible shares) that appear to have never been counted in the latest voting results.

Yahoo! has been mired in controversy for nearly two years now, first with the release of the "Peanut Butter Memo" that aired a lot of internal dirty laundry, then Terry Semel's departure, and more recently the Microsoft (MSFT - Get Report) and Carl Icahn chapters. Many expected last Friday's shareholder meeting in San Jose to be a raucous affair. There were some pointed questions (including a few asked by me) but not the "fireworks" many in the press expected. With that in mind, coupled with the rather favorable voting results released after the meeting, many commentators gave Yahoo! a thumbs-up for having seemingly stared down its critics.

The press release Yahoo! issued last Friday following its annual meeting suggested that shareholders had more strongly supported Yahoo!'s board compared to 2007. Yet, as I dug into the results over the weekend, it became clear to me that 200 million Yahoo! shares (on average) were not counted in this year's election compared to the 2007 and 2006 votes.

2008 Results

As per Friday's press release from Yahoo!, only 1,046,095,584 out of 1,381,008,701 possible shareholder 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 632,023,657 "for" votes and 414,071,927 "withhold" or "against" votes for a total of 1,046,095,584. This means, according to the press release, he received 60.4% of votes "for" his re-election and 39.6% of votes "against" his re-election.
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