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Local hosting provider mentioned in Yahoo shareholder suit!

June 9, 2008

Christine Ambrose has some interesting coverage of the various Yahoo! board members and their inter-relationships as revealed by the latest shareholder lawsuit against the company.  Two members of the advisory board of NeoSpire, a Dallas-based hosting provider and customer of Yahoo!, are members of the Yahoo! board as well.  According to Chrstine:

Gary L. Wilson: A Yahoo! board member since November 2001. Wilson received compensation of over $482,000 for the fiscal year 2007, and about $588,000 for 2006 for serving as a Yahoo! board member. Wilson has numerous ties to Bostock. They [Roy Bostock Chairman of Yahoo!] were roommates at Duke University, are both trustees of Duke and serve on the boards of the NCAA Foundation and Northwest Airlines. The two also serve on the advisory board of NeoSpire Corp., a managed hosting company co-founded by Wilson’s son, Derek Wilson, and with which Yahoo! does business.

Elizabeth MacDonald suggests that the real reason Wilson and Bostock voted against the Microsoft deal was money.  She explains,

The lawsuit says that the board directors who are not employees of Yahoo! have an incentive to reject Microsoft’s $33 a share offer or any bid in that vicinity. That’s because it alleges that 80% of the value of the director’s compensation in fiscal 2006 and over 70% in fiscal 2007 came in the form of stock options that had strike prices either at or below the $33 a share bid, so the offer would hardly make them any money. Specifically, the suit says each director got 50,000 Yahoo! stock options with an exercise price of $36.75 in May 2005, 15,000 options with an exercise price of $32.92 in May 2006, and 15,000 options with an exercise price of $27.05 in June 2007. So the board members’ 2005 and 2006 options would be essentially worthless at a bid of $33 a share, and the 2007 options would be worth just $90,000 per director, the suit says.

What the lawsuit fails to mention is that Gary Wilson and Roy Bostock don’t need the money.  Had she done a little digging, she would have realized that a few hundred thousand dollars simply wouldn’t matter to either of these board members.

Written by Alexander Muse · Filed Under Blog 

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