The Jerry Yang Pride Tax

[libertango]

This commentary in the New York Times reminded me of something I wanted to work out.

It's been a while since I posted on Yahoo's spurning of Microsoft's offer. Now that all parties have agreed that the bid is really, truly, finally over, we can calculate something, Harper's Index style:

shares:        1.38B
price today: $23.47
MSFT offer:  $33.00
difference: -$ 9.53
JYPT:        $13.15B

"JYPT" is the "Jerry Yang Pride Tax" assessed on the shareholders of Yahoo, and is pronounced, "gypped."

$13 billion just to give Microsoft a Golden Shower. And to think Eliot Spitzer was considered a spendthrift.

Comments

[patgreene.livejournal.com]

Part of the problem I have with American corporation law is the extent to which employees are ignored as stakeholders in a potential merger. There are very real reasons for employees of Yahoo to be resistant to a merger with Microsoft. Just ask Compaq workers how well that merger with HP worked out for them.

"Shareholders are the only stakeholders that matter" can be disastrous for the non-shareholding employees involved and for the health of the company.

Merging

[hal-obrien.livejournal.com]

"There are very real reasons for employees of Yahoo to be resistant to a merger with Microsoft."

Indeed. "Surveys indicate a failure rate for corporate mergers ranging from 65 percent to 85 percent."

"Just ask Compaq workers how well that merger with HP worked out for them."

That assumes the two situations are comparable. I know a number of MSFT employees who joined the company through mergers, and are reasonably happy with the results (and still there as much as a decade post-merger).

A more pointed question would be, Just ask those Yahoo Photos employees how well the Flickr acquisition worked out for them. Of course, not every company may be as incompetent as Yahoo in integrating acquisitions. Though I can understand why Yahoo employees might think so.

""Shareholders are the only stakeholders that matter" can be disastrous for the non-shareholding employees involved and for the health of the company."

That also is correct. Which is why I usually counsel companies to stay privately held as long as possible, and to go public only when the survival of the company is at stake.

However, having gone public in the first place it is the most rank hypocrisy to then cry foul that going public has consequences. Jerry Yang has taken billions of shareholders' money. To then roll on the floor and throw a tantrum because the shareholders might want something in return, or something different than what he wants, is just as childish as it sounds.

If he wanted control, he should either have stayed private, or retained 50.1% of the company. He has no one to blame but himself.