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Key Yahoo Investors Smell a Rat in Proxy Vote

So, apparently some people are wondering if last Friday's relatively strong shareholder vote (about 80 percent favorable, in the face of diminishing returns and increasing internal unrest) to retain Yahoo's board of directors and CEO was counted correctly.

Colleague Kara Swisher reported yesterday in her AllThingsD blog that one of Yahoo's largest and most influential shareholders, Los Angeles-based Capital Research Global Investors, has asked for an outside investigation of the shareholder vote. Not exactly a show of support for CEO Jerry Yang.

Capital Research Global Investors is one of two funds separately managed at the home company, Capital Research & Management, and it owns about 6.5 percent of the company; its brother fund, Capital World Investors, owns even more: 9.8 percent.

Capital Research people held their own informal vote and found that a vast majority had expressed an unfavorable view of Yang remaining as CEO -- but having no problem with the co-founder of the company remaining on the board.

The proxy committees for the two funds had recommended to their investors last week that they should withhold votes specifically from Yang and from various board members, including Chairman Roy Bostock, to register disappointment with their performance. But Capital Research now is questioning whether those votes were tabulated correctly.

As a result, Swisher wrote, the investment fund has approached outside vote tabulator Broadridge Financial Solutions, a New York-based financial services company that does securities clearing and processing, to investigate.

Capital isn't the only company wondering what's going on here. Jeffrey Lindsay, an analyst at Sanford C. Bernstein, told Reuters that the informal polling his firm had done among major investors "showed widespread dissatisfaction with Yahoo's handling of talks with Microsoft," which the broker had expected to translate into a more substantial number of withheld votes for directors.

This story is far from over. It's important, so we'll stay on it.

Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 13 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...