Bartz battles to retain Yahoo board seat
SAN FRANCISCO |
SAN FRANCISCO (Reuters) - Former Yahoo Inc Chief Executive Carol Bartz and her erstwhile employer are dueling over Bartz's board seat, which she says she wants to keep, despite being fired from running the company.
Bartz, who was abruptly fired from her job as CEO by chairman Roy Bostock on Tuesday, said in an interview that she intended to remain on Yahoo's board.
But hours after the interview was published, a Yahoo board spokesman said she couldn't keep her seat on the board.
"Ms. Bartz is obligated to resign from the Board and we expect her to do so," said Charles Sipkins, a spokesman for Yahoo's board of directors.
Bartz may have some wiggle room despite the provision in her employment contract, said corporate governance expert Nell Minow.
The January 2009 contract states that "upon any termination of employment, you shall promptly resign from the Board and all officerships, directorships or fiduciary positions with the Company and its affiliates."
But Bartz could still make the argument that she's been elected by the shareholders, said Minow, who was the editor of Corporate Library, a predecessor to corporate-governance consultancy GMI.
Bartz was appointed to the board upon becoming Yahoo's chief executive in 2009 and has been re-elected by shareholders at subsequent annual meetings. She could maintain that the elections would supersede the clause in the contract.
Bartz characterized Yahoo's board as "doofuses" who "fucked me over" in an interview with Fortune magazine that was published on Thursday. Detractors say Bartz didn't do enough to turn around Yahoo, which has been losing market share in search and advertising.
Generally, language requiring CEOs to step down from board positions if they leave their posts is a standard part of any CEO contract, said Paul Hodgson, a senior research associate at GMI. If the board chooses to, it can ask the former CEO to remain, as Apple's board did when Steve Jobs resigned as chief executive last month.
But such language wasn't always standard. HealthSouth former CEO Richard Scrushy was fired in 2004 amid a federal fraud investigation but held onto his board seat, resigning only in late 2005 after he was not renominated.
In situations where there is an unwanted board member, "it's awkward," said Charles Elson, a University of Delaware finance professor specializing in corporate governance. He said boards typically form special committees that exclude the ostracized director, and conduct the bulk of board business through those committees.
Minow -- once a movie reviewer for Yahoo -- believes Bartz's comments about remaining on the board are a negotiating tactic connected to her severance arrangements, and that she doesn't really want to remain on the board.
"We would all enjoy that very much" from an entertainment perspective, she told Reuters. "But we don't want the board to be any more dysfunctional than it already is."
(Reporting by Alexei Oreskovic and Sarah McBride; Editing by Peter Henderson, Bernard Orr, Gary Hill)
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