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This Is One Yahoo Investor’s Plan to Fix the Company

By
Hilary Brueck
Hilary Brueck
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By
Hilary Brueck
Hilary Brueck
Down Arrow Button Icon
March 24, 2016, 8:01 AM ET
Photograph by Ethan Miller/ Getty Images

Update (Mar 24 9:33 a.m. ET): Here’s the Letter From Starboard Calling for the Ouster of Yahoo’s Entire Board.

One of Yahoo’s activist investors could be preparing a real shakeup for the company’s boardroom.

Starboard Value hedge fund is reportedly preparing to announce Thursday that it will nominate nine new directors to the Yahoo board in a bid that would replace the company’s entire seven-member board, The Wall Street Journal first reported.

Earlier this year, Starboard threatened a plan to gain control of the Yahoo board if the company didn’t make changes fast enough. The Internet giant has struggled to grow in recent years, and dozens of top executives have recently fled the company.

The shakeup threat comes just as Yahoo (YHOO) courts potential buyers for its core Internet business. Some Yahoo investors have said they are worried the Starboard proxy fight for control of the business could make the company look unstable to new bidders. Potential Yahoo buyers include Verizon Communications (VZ), Time (which owns Fortune), and some private equity firms.

In a copy of the new Starboard letter sent to Fortune, the activist investor says Yahoo’s current board shouldn’t be trusted with making decisions about the future of the business:

“We have been extremely disappointed with Yahoo’s dismal financial performance, poor management execution, egregious compensation and hiring practices, and general lack of accountability and oversight by the Board,” wrote Starboard CEO Jeffrey Smith.

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But CEO Marissa Mayer argues she has a “three-year strategic plan” to turn the company around. Starboard chief Jeffrey Smith has called for Mayer to step down, arguing that since she took the helm at the company in 2012, “each quarter is worse than the last.” Starboard holds a 0.75% stake in Yahoo, Reuters reports.

For more on Marissa Mayer, watch:

All Yahoo shareholders have until March 26 to submit board of director nominations ahead of the company’s annual meeting.

About the Author
By Hilary Brueck
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