SAN FRANCISCO - A major Yahoo shareholder passed over for a seat on the troubled Internet company’s board is blasting the decision as illogical.
Hedge fund manager Daniel Loeb described the snub as a glaring example of shoddy corporate governance in a Wednesday letter to Yahoo chief executive Scott Thompson.
Loeb contends he would have been a better representative for Yahoo Inc. shareholders because he controls a 5.8 percent stake in the company through his fund, Third Point LLC. Loeb has spent about $1 billion buying Yahoo shares since September.
Yahoo said on Sunday that it appointed three other directors who have not been investing in the company. Thompson apparently further aggravated Loeb with his explanation for the decision. In his letter, Loeb says Thompson told him that he was rejected because his “experience would not be additive.’’
Thompson also explained to Loeb that Third Point’s large holdings in the company might give him an incentive to recommend actions focused on short-term gains instead of a strategy that would be produce better long-term returns.
Yahoo had no immediate response to Loeb’s letter.
Loeb defended his record as an investor who has held stock in other companies for several years. He also pointed out that Third Point’s stake in Yahoo gives him a greater incentive to do what’s right for shareholders.
Loeb is still seeking to get his way by leading a rebellion against Yahoo. He has nominated himself and three others to Yahoo’s board and launched a campaign that is likely to include brickbats similar to Wednesday’s letter for several months. Some analysts are already worried the theatrics will distract Thompson as he tries to snap the company out of a financial funk.