Marissa Mayer Wanted Loeb Off Yahoo’s Board

The January 2014 edition of Vanity Fair magazine includes a in-depth article on Marissa Mayer, the CEO of Yahoo! Inc. (NASDAQ:YHOO). The article offers an interesting perspective on her career and personality, and further details on Yahoo’s July share buyback from activist investor Dan Loeb and Third Point Capital.

Marissa Mayer Wanted Loeb Off Yahoo's Board

Marissa Mayer bio

Yahoo! Inc. (NASDAQ:YHOO) CEO Marissa Mayer began her career at Google in 1999 as the 20th employee and the first female engineer. She had been a standout student at Stanford, and had her choice among more than a dozen job offers, but Mayer chose to go with the challenge and limitless horizons of a startup with great potential.

Mayer had been known in school as a compulsively hard worker, but she earned her reputation as a workaholic in the first few years at Google Inc (NASDAQ:GOOG). An article in Vanity Fair quotes Mayer as saying she worked at least 250 all-nighters during her first five years at Google. Mayer rapidly worked her way up to become the face of Google, as co-founders Larry Page and Sergey Brin largely avoided the press.

Not everything was wines and roses for Mayer at Google Inc (NASDAQ:GOOG), however, as her abrasive management style rubbed a lot of people the wrong way. According to some sources, there was an internal revolt against Mayer, and Page and Brin transferred her off the search division. Mayer, however, took the demotion in stride and said publicly “she had moved to supervising a lot more people”. She therefore remained a big part of Google’s image even after her effective demotion.

Activist shareholder Dan Loeb of Third Point Capital staged a raid on Yahoo! Inc. (NASDAQ:YHOO) in 2011, and managed to get rid of the incumbent CEO Scott Thompson in short order, and get three associates named to the board. Yahoo’s new board courted Mayer and she became the CEO on July 16, 2012.

Mayer maneuvered Loeb off Yahoo board in July

It can be argued that Mayer’s generous offer to Loeb for nearly all of his Yahoo! Inc. (NASDAQ:YHOO) shares at the end of July, and leading to him resigning from the board of directors was a shrewd move; or, it can be seen as Mayer overplaying her hand and in essence paying Loeb to leave. But either way you look at it, according to Vanity Fair, it was Mayer’s idea.

Loeb approached Mayer in early July, telling her the stock had hit his target price of $29 a share and he was planning to sell close to half of his holdings, around 20 million shares. Mayer then surprised Loeb by offering to have Yahoo! Inc. (NASDAQ:YHOO) buy all 40 million shares he held. This in effect guaranteed Loeb a price he very likely would not have been able to get on the open market. A few days later he accepted, and the transaction netted Loeb more than a billion dollars.