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The intended focus of Yahoo’s June 25 shareholders meeting was the company’s successes in 2013. CEO Marissa Mayer called it a year of “tremendous progress.”
What the company’s vocal shareholders wanted to talk about, however, and what dominated the question periods, was the nomination—and election, during the meeting—of former Walmart CEO H. Lee Scott to Yahoo’s board of directors.
More than two years ago, Walmart became the focus of a bribery scandal in Mexico, where it is reported to have paid more than $24 million to hustle the expansion of its chain in that country. In April 2012, The New York Times reported that a whistle was blown in 2005, when a former executive informed a senior Walmart lawyer that the company had “orchestrated a campaign of bribery to win market dominance.”
After Walmart’s lead investigator, a former FBI special agent, recommended expanding a preliminary investigation, Walmart leaders shut it down, the Times reported. It added that its reporters’ investigations uncovered “a struggle that pitted the company’s much publicized commitment to the highest moral and ethical standards against its relentless pursuit of growth.”
The report noted that Scott, then Walmart’s CEO, “rebuked internal investigators for being overly aggressive,” and days later the investigators’ files were shipped to Mexico and responsibility for the case was shifted to the general counsel of Walmart de Mexico. This was, said the Times, “a remarkable choice since the same general counsel was alleged to have authorized bribes.”
One shareholder representative asked what Yahoo’s vetting process was, and how Scott’s integrity was assessed.
Maynard Webb, chairman of the Yahoo board, said that Yahoo wanted a board member with strong CEO experience, and so board members developed a list of potential candidates who were pursued by an outside recruiter.
“Lee’s experience, having run one of the country’s largest companies, was stellar,” said Webb.
He added that the Walmart-related allegations were vetted by internal and external counsel, and Yahoo is “very pleased and supportive of welcoming Lee to the board.”
When another shareholder asked whether there wasn’t another candidate who also had retail experience, Webb answered, “We felt that his integrity was very high and the value he could bring to Yahoo … was very high. He’s an avid Yahoo fan and user.”
Mayer added, “His experience is something I’m excited to learn from.”
Yahoo’s Controversial Board Appointment Dominates Shareholder Meeting
Another shareholder noted that the Yahoo board “doesn’t include a single person of color.” Lee is white, and so are Charles Schwab Jr. and David Filo, the other men who were voted onto the board during the meeting. The board, this person pointed out, “needs a member who can help overcome, rather than reinforce, inequities.”
Webb responded that Yahoo puts diversity “front and center” and that “30 percent of the board members are women.” (CEO Mayer and retired Ernst & Young partner Sue James, also a white woman.) He added that Yahoo will “continue to work on this important topic.”
Yahoo’s Year of Progress
Repeating something of a Yahoo mantra, Mayer opened her presentation by saying that Yahoo’s mission is to “make the world’s daily habits inspiring and entertaining.”
The average mobile device user checks his device 150 times a day, said Mayer, adding, “The opportunity to participate in that is tremendous.”
The plan to participate involves a cycle, she said: Hire great people, who build engaging products, which lead to increased traffic, which lead to increased revenue.
Hiring has doubled since 2012, she said, and 40 percent of 2013 hires were engineers.
Yahoo also brought in new leadership, some of which is helping it build “editorial excellence” in its growing number of digital magazines. It most recently added Yahoo Movie and Yahoo Beauty to Yahoo Food, Yahoo Tech and Yahoo Screen.
Yahoo also narrowed its areas of focus down to search, communications, digital magazines and video.
The “levers” that need to be pulled to deliver growth, she said, are mobile, native, social and video.
The mobile component involves those 150 daily check-ins with one’s display. On the video front, Yahoo has committed to streaming a live concert every day for a year.
It has also created native advertising that “dovetails” with its digital media content, Mayer explained, showing a Splenda ad that was barely distinguishable from the editorial content on Yahoo Food.
Regarding social, “At Yahoo it’s all about Tumblr,” said Mayer, adding that the platform doesn’t limit brands to a certain number of words and lets them “express themselves however they see fit.” Plus, while traditional social content has really no longevity, on Tumblr, 30 percent of engagements with content happen 30 days after a post goes up.
Discussing Yahoo’s meetings to address “PB&J”—process, bureaucracy and jam—Mayer said that more than 1,000 things had been fixed.
“Nothing is too small [to help make a difference],” she said. “It all builds toward a better culture.”
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