ProxyMatters.com

In a quick response to Microsoft’s weekend letter, Yahoo responded loudly today with a letter criticizing Microsoft’s acquisition offer (valued today at roughly $29/share).

What does this rejection mean?  It means that Yahoo CEO Jerry Yang, co-signee of the letter, was NOT busy today negotiating a $36/share deal with News Corp.  It means that Yang was NOT busy today negotiating for an attractive combination with Time Warner’s AOL unit.

It does means that Yahoo and Microsoft are much farther away than previously thought.  You negotiate privately over $0.50-$1.50/share.  You send hastily written letters when the difference is $8.00/share.  This was the latter.

It also means that Yahoo believes that Microsoft will not increase the bid, that there are no other options for deals at this point, and that this will be settled via proxy fight in the shareholder vote.

Meanwhile, Yahoo’s stock fell 2.3% today, in apparent disagreement with Yang’s principle argument that Yahoo would be better off alone.

Stay tuned… we anxiously await Microsoft’s letter tomorrow.  Then again, Microsoft appears content to maintain the upperhand and do nothing but watch Yahoo’s stock drop right back to pre-offer levels.

For more from The New York Times, click here.

One less proxy fight will be decided by shareholders in the 2008 proxy season.

Reuters is reporting that Motorola and legendary corporate raider Carl Icahn have reached an agreement to give two board seats to Icahn’s nominees.

Keith Meister, Icahn’s investment director, will be seated immediately on Motorola’s board, while investment banker William Hambrecht will be officially supported by Motorola in the upcoming shareholder vote.

Motorola reiterated its plan to spin off its cell phone business, with Icahn noting that the new company will be “free from poison pills and staggered boards.”

In a well-publicized letter to Yahoo’s board this weekend, Microsoft announced that it will continue its path toward a hostile proxy fight if Yahoo’s board continues its path in forestalling negotiations.

Sounds like Yahoo’s board has been too busy negotiating with suitors other than Microsoft.

The Wall Street Journal reports that talks between Yahoo and Time Warner “have heated up recently.”  Other talks are rumored to include News Corp.

As depicted in the so-so movie Pirates of Silicon Valley, Microsoft still faces the dilemma of being viewed as the Orwellian big brother.  This fact is hard to underestimate, particularly when viewed in line with the typical psyche of a company about to be acquired. 

Yahoo’s management and board will continue to fight Microsoft for this very reason.  The only remaining question is whether Yahoo shareholders feel the same way. 

If Yahoo shareholders do, in fact, feel animosity toward Microsoft, Yahoo will feel more confident walking into a proxy fight.  If, however, Yahoo shareholders seek to maximize their financial gain, look for Yahoo to strike a deal with another partner prior to its annual shareholder meeting

Our friends at CorporateCounsel.net have highlighted recent data on e-proxy usage, indicating that the current system is failing to increase participation by retail shareholders.  In fact, e-proxy is causing a decrease in participation.

“Retail vote goes down dramatically using e-proxy (based on 80 meeting results); number of retail accounts voting drops from 19.2% to 4.6% (over a 75% drop) and number of retail shares voting drops from 30.1% to 23.3% (a 23% drop)”

Why has e-proxy hurt participation?

Perhaps it’s just the packaging.  According to Dominic Jones at IR Web Report…

“Every other company that has taken advantage of notice-and-access so far this year has failed to provide their online proxy materials in a format that is convenient for online reading, one of the requirements under the SEC’s e-proxy rules.  In easily 80% of cases, companies are posting their information in template-based documents from big vendors where the text is in images or Flash and so cannot be used in several fundamental ways.  Navigation in these cheap, mass-produced documents is also woefully inadequate, particularly for older users.”

In a great post worth reading, Dominic praises Intel’s recent e-proxy format and design.

Wattles Capital Management is getting some free p.r. today, having sent a letter to Circuity City’s board and then disseminating the letter via PRNewswire (to read the letter, click here).

No real news to report here, as Wattles merely reiterates its boilerplate position.  Note to shareholders:  if Wattles leads Circuit City with the same weak effort that Wattles is putting into this proxy fight, Circuit City shareholders will not be better off.  It takes more than letters addressed to the board to win a proxy fight, and it takes more than hindsight to run a company.

Wattles’ slate of 5 directors is still set to compete against Circuit City’s slate at the June 24th annual shareholder meeting.

Shareholders are barking up the tree again in advance of next week’s annual shareholder meeting at Morgan Stanley.

The Wall Street Journal writes a great piece detailing the efforts of CtW Investment Group, the investment arm of labor federation Change to Win.  CtW is urging a “vote no” against three directors:  Chairman/CEO John Mack,  Robert Kidder, and Howard Davies.

For the record, RiskMetrics (formerly ISS) is recommending “vote yes” for the entire slate of Morgan Stanley directors.  Glass Lewis recommends “vote no” on six nominees.  Proxy Governance is advising “vote no” on solely Robert Kidder.

The Wall Street Journal reports that Microsoft is unlikely to raise its offer for Yahoo, causing Yahoo shares to slump in market trading today.

Proxy fight fans must differentiate between “news reporting news” and “news being used for negotiations”.  The WSJ article reads a lot like the latter.

If Yahoo is refusing to budge on their position (be it $38/share, $40/share, no sale, etc.), this release of information by Microsoft is intended to coerce Yahoo into bending toward Microsoft’s demands (be it a sweetened bid up to $32/share, $34/share, etc.).

Microsoft could likely win a proxy fight vs. Yahoo for very little cost.  But it might risk alienating Yahoo employees (i.e., mental assets) in the process.  Thus, talks are likely to continue.

For those who might not read techie blogs, our friends at TechCrunch are predicting a $34/share deal for Yahoo.

In an excellent piece, TC claims that Microsoft and Yahoo are being quiet only publicly, having been in clandestine talks for some time.

You know that you’re into something sexy when PBS comes knocking.

A week ago, PBS’s Nightly Business Report presented a quick snapshot of this year’s proxy season and some of its key players.

“Trouble at the Top: Proxy Fights 2008″ (click here) includes comments from AFSCME’s Richard Ferlauto.

“Roundtable Review of Corporate Governance” (click here), “Trouble at the Top: Shareholder Rights” with comments from Nell Minow (click here), and “One on One with Carl Icahn” (click here) serve as quick primary reads as well.

The money quote from the Icahn interview…

“I can go into any company, almost any company and I’m not a manager and I say this at the risk of being immodest, and I can knock 30 percent off costs because there’s so much waste and the CEO is out there playing golf. And I used to say the only time you get him off the golf course is when I file a 13-D.”

Look up ”corporate gadfly” in the dictionary, and you’ll find Evelyn Y. Davis.

Click here to view this video gem, CNBC’s annual interview with the Queen of Annual Meetings.  A must see for all.