Dan Loeb Blasts Yahoo After It Rejected His Board Nominees $YHOO

Hedge Fund News: Dan Loeb, Phil Falcone, CitigroupHedge fund manager Dan Loeb has almost 6% of his fund Third Point invested in Yahoo (YHOO). He initiated the position during the third quarter. Since then, Loeb has been very vocal about trying to turn Yahoo around. He called for the resignations of founder Jerry Yang and Board Chairman Roy Bostock as a concerned shareholder and succeeded. Yang left the company in January while Bostock is slated to resign in April after the annual shareholders’ meeting along with few other board members.

These changes obviously left some vacancies on Yahoo’s board – and purged the board of any who had rejected Microsoft (MSFT)’s $45 billion buyout offer for Yahoo in 2008. Loeb, who is the largest shareholder outside the firm, recently nominated himself and and three others to the board – Maeva Group CEO Harry Wilson, former MTV Networks President Michael Wolf and former NBC Universal CEO Jeff Zucker. In a letter defending his candidates and chastising Yahoo for not giving those candidates appropriate consideration, Loeb said that his intention was to “ensure Yahoo! maintains its place as a premier internet company by forcefully addressing the immediate strategic and operational challenges it faces.” Loeb continued by saying, “With such a reconstituted Board in place, a powerful strategic planning committee would promptly but thoughtfully map out a plan to take full advantage of the Company’s valuable assets and stop its painful decay.”

On Sunday, Yahoo named three new directors – John D. Hayes, an executive at credit card company American Express (AXP); Peter Liguori, a former chief operating officer of Discovery Communications (DISCA); and Thomas J. McInerney, outgoing chief financial officer of Internet company IAC/InterActiveCorp (IACI) – and said that Loeb nominee Harry Wilson could be an acceptable option and that it would consider a second, “mutually acceptable” candidate. According to the Wall Street Journal, the company defended itself by saying that the candidates it selected were “more qualified” than Loeb.

In response, “Loeb wrote that Yahoo has informed him he would be ‘conflicted’ as a director due to the 5.8% stake that his firm, Third Point LLC, has acquired in the company–which could lead Loeb to seek a ‘short term’ solution to Yahoo’s difficulties.”

“Only in an illogical Alice-in-Wonderland world would a shareholder be deemed to be conflicted from representing the interests of other shareholders because he is, well, a shareholder too,” wrote Loeb. “This sentiment further confirms that Yahoo’s approach to Board representation is shareholders not welcome.” Loeb continued by expressing that his fund’s efforts to obtain four board seats was by no means an attempt to control the board. “Any individual voice in the room would be only one of 11 or 12,” he wrote. “If one director has too ‘short-term’ an approach for other members, a healthy debate will ensue and all directors as a group will decide the issue in a fully informed and deliberative manner.”