Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
San Francisco Chronicle – A major investor called on Yahoo Inc. to sell its search business to Microsoft Corp. on Wednesday, adding to the pressure on the Sunnyvale Web portal to restart talks with its rival.
Meanwhile, Yahoo agreed to water down an employee severance plan that had been criticized as extravagant, raising speculation that the company was shopping itself for a sale. The changes were made to settle a lawsuit in which shareholders accused Yahoo of devising the severance plan to foil Microsoft’s takeover bid earlier this year.
Ivory Investment Management, a hedge fund that owns a 1.5 percent stake in Yahoo, sent a letter to board members that said a sale would garner $15 billion and help restore the company’s tumbling finances.
New York (HedgeCo.Net) – Activist investor Carl Icahn purchased another 6.8 million shares of Yahoo stock last week at a price tag of about $67 million, further boosting his already vast stake in the company to almost 5.5 percent.
According to a filing with the Securities and Exchange Commission, that stake is equal to 75.6 million shares in the Internet giant, or about $870 million.
The Corporate Raider has been outspoken about his beliefs that Yahoo should strike a deal with Microsoft Corp. in hopes of better competing with Google. Although no merger talks are currently in the works, some believe Icahn is still pushing for the deal.
Icahn was also vocal about his desire to dump Jerry Yang, saying that the former Yahoo CEO did everything he could to discourage a deal with Microsoft. Yahoo is currently seeking a replacement for Yang after he stepped down on November 17. Yang had previously rejected a $31-a-share offer by Microsoft earlier this year, prompted Icahn and other board members to question his leadership.
After news circulated on Friday that Icahn had increased his stake in the struggling company, Yahoo shares rallied almost 9%, up to $11.51 in the shortened trading session. Icahn may be trying to reverse the massive losses he incurred this year, after shares of Yahoo plummeted almost 60 percent.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
New York Post – Three board members at the embattled Dillard’s department-store chain lashed out at a pair of hedge funds that are agitating to oust the retailer’s top management.
In a rare public statement, the Dillard’s trio of independent directors rejected a call by Barington Capital and Clinton Group to fire Chief Executive Bill Dillard Jr. The hedge funds have accused Dillard and his three siblings of being "overpaid and underqualified."
The hedge funds note that the four Dillard siblings have earned more than $16 million annually for the past three years despite a steady decline in the company’s performance and stock price.
But Dillard’s directors Warren Stephens, Peter Johnson and Robert Connor countered that the CEO’s salary was "well below the median in its peer group in 2007," citing a report from Institutional Shareholder Services, a leading proxy adviser. The directors also noted that the board decided against paying out bonuses last year, based on the company’s poor performance.
New York (HedgeCo.Net) – Three Dillard’s Inc board members rejected a plea from hedge funds to have the company’s CEO, William Dillard II, booted from the chair.
Barington Capital Group LP and Clinton Group Inc. had been calling for the board to start an immediate search for a new CEO in addition to ousting other family members due to the company’s poor performance and lagging stock prices.
However, in a letter obtained by Reuters yesterday, directors Peter Johnson, Warren Stephens and Robert Connor said the current management team “has an appropriate strategy for dealing with the new environment.”
The board members also failed to side with the hedge funds on their claim that William Dillard II along with other family members make far more than the same executives at similar firms. Going a step further, they cited reports from the Institutional Shareholder Services and stated that the CEO’s salary is “far below the median in its peer group in 2007.”
The hedge funds original complaint mentioned a report by advisory Proxy Governance while claiming William Dillard II makes 54 percent above the median. The board fired back, pointing out that the peer group selected by the hedge funds “included companies in totally dissimilar industries to Dillard’s.”
Together, the hedge funds own nearly 6% of Dillard’s class A stock. The Dillard family owns nearly all of the class B stock, a move originally designed by the current CEO in order to make ceding control virtually impossible.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
Bizjourmals.com- The country’s largest proxy advisory company recommended the election of four of the five board members nominated by hedge funds engaged in a proxy contest with CSX Corp.
The Children’s Investment Fund Management LLP and 3G Capital Partners Ltd. have nominated five new members for CSX’s 12-member board.
The RiskMetrics Group, a proxy advisory company, withheld recommending Gary Wilson. It also recommended rejecting CSX’s proposal that would allow shareholders to call special meetings except on topics voted on within the last year. Because CSX elects board members at its annual shareholder meeting, that would bar special meetings to recall board members. RiskMetrics said the proposal would further entrench the board and isolate shareholders.
