Yahoo Vote-Counting Error Overstated Support for YangYahoo Inc. said a greater number of shareholder votes were cast opposing the re-election of Jerry Yang and other directors than reported, after a company responsible for processing multiple shareholder votes said it made a mistake in handling those of one large investor.
Acknowledging the tabulation error, Yahoo said 66% of votes were cast in support of Mr. Yang, who also is Yahoo's chief executive, down from the 85% it had announced. Yahoo Chairman Roy Bostock received a 60% favorable vote, down from 80%. Yahoo director Ron Burkle's share of supportive votes fell to 62% of votes cast from 81%.
The disclosure didn't affect the outcome of Friday's shareholder election, in which all directors were re-elected. It weakens the endorsement Mr. Yang and other directors involved in negotiations with Microsoft Corp. received during Yahoo's shareholder vote last Friday and could serve as possible ammunition for critics who continue to seek strategic changes at the Sunnyvale, Calif., Internet company.
Broadridge Financial Solutions, which was responsible for sending Capital Research Global Investors' voting preference to be tallied, was behind the glitch. Capital Research, which owns at least 6% of Yahoo, has been a steady critic of the Yahoo board's decision to reject a number of offers from Microsoft.
Chuck Callan, senior vice president of regulatory affairs at Broadridge, said a printout the Lake Success, N.Y., company sent to the voting tabulator mistakenly cut off the first digit of the number of shares the investor wanted to withhold for certain directors. The incident was isolated and triggered by a unique combination of factors, including the fact that at least 100 million shares were being withheld. Broadridge -- which processes votes for 14,000 meetings a year -- determined that no other meetings within the past 18 months were affected, and it has fixed the problem.
Broadridge investigated Monday at the request of Capital Research Global Investors, which suspected that the number of withheld votes ought to have been higher. A few investors Tuesday drew attention to another issue -- the fact that significantly fewer votes were cast this year than in previous years. Some have suggested that investor confusion around Carl Icahn's proxy contest, which he ended with a settlement that allows him and two others out of a group he recommends to join the board, could have resulted in more ballots being invalidated than in previous years.
Shareholder voting glitches aren't uncommon given the number of companies involved in the process, says Claudia Allen, chairwoman of the corporate-governance-practice group at Neal Gerber & Eisenberg LLP, a law firm in Chicago. "Most of the time these things happen you don't hear about them," she said, describing this as a case of a shareholder "sending a message."
By: Jessica Vascellaro
Wall Street Journal; August 6, 2008
