Grass-Roots Activist: Yahoo! Just the Start

Investor-blogger who helped take down Semel says mid-cap CEOs are next.
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Look out, high-tech fat cats. Eric Jackson, the private investor and blogger who helped bring down Yahoo!'s (YHOO) Terry Semel, is turning his sights on other underperforming CEOs.

"I have a list, and I'll be taking action," he tells me. "There are a number of other companies that are ripe for the same kind of approach. This won't end with Yahoo!"

He's naming no names, though he says several of his possible targets are "mid-cap tech companies."

After taking on the board at Yahoo!, which has a market cap of $37 billion, that should be a breeze.

Semel stepped down this week after a remarkable shareholder revolt at last week's annual meeting. The board suffered a major humiliation after one-third of the votes were cast against management on some ballots.

Yes, as with all such issues, Semel's was finally decided by the big institutional investors. And yes, the ultimate factor was Yahoo!'s lackluster performance in the last few years.

But none of that might have coalesced into a coup without the grassroots campaign to bring change.

And what made this revolt unusual was the way small shareholders were able to use blogs, online videos and other "netroots" tools to start the ball rolling and build up momentum.

Thanks to the Web, small shareholders didn't have to sit around in frustration waiting for fat cats to act. They could push things along.

Principal among them was Jackson, a business consultant with his own firm in Naples, Fla. He even made a pitch to other shareholders via YouTube.

Jackson says his campaign techniques weren't just inspired by past proxy battles waged by top financiers but also by recent "netroots" political campaigns. "I took my inspiration from the likes of Carl Icahn, but also from the likes of Howard Dean and Ned Lamont," he said. "We used YouTube and blogs and wikis. We used the Internet and the blogs to come out of nowhere and build support at the grassroots level."

It was a fitting end for Semel. During his tenure from 2001 to 2007, he had missed out on whole swathes of new developments on the Internet, from


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to Wikipedia to social networking sites such as MySpace. In the end he was brought down by an online revolt he never saw coming.

"I don't think anyone would have predicted this outcome a few months ago," says Jackson. At the start of his campaign, he remembers, Semel's defenders mocked it. "Words like 'feeble' and 'useless' were used," he recalls.

His takeaway from it all now? "In the age of the Internet, the best ideas will rise to the top. It doesn't matter how large or small you are. If you can put together a compelling argument and bring others together, you can have a voice."

To watch Alix Steel's video take of this column, click here


In keeping with TSC's editorial policy, Brett Arends doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Arends takes a critical look inside mutual funds and the personal finance industry in a twice-weekly column that ranges from investment advice for the general reader to the industry's latest scoop. Prior to joining in 2006, he worked for more than two years at the Boston Herald, where he revived the paper's well-known 'On State Street' finance column and was part of a team that won two SABEW awards in 2005. He had previously written for the Daily Telegraph and Daily Mail newspapers in London, the magazine Private Eye, and for Global Agenda, the official magazine of the World Economic Summit in Davos, Switzerland. Arends has also written a book on sports 'futures' betting.