Yahoo management: Pigs at the Trough
Let’s start with this, no, I do not own any Yahoo stock.
So Yahoo reported quarterly earnings tonight and they were not very good, at least as defined by Wall Street sheep, er, I mean analysts.
Yahoo 4Q Profit Misses Views; Shares Fall
Tuesday January 17, 7:07 pm ET
By Michael Liedtke, AP Business Writer
Yahoo Fourth-Quarter Profit Falls Short of Analysts’ Expectations; Shares Decline 13.5 Percent
Shareholders suffer a 13% haircut in a matter of minutes, yet the company CEO Terry Semel had this to say,
Everything is going extremely well. We feel great about our company and great about our prospects.
By great about “our” company and “our” prospects, was he referring to his fellow executives who allot themselves free or ridiculously underpriced stock options hand over fist or was he referring to the actual owners of the company, the shareholders? Can’t be the shareholders, they are taking a bath tonight.
This isn’t the first time he has tried to sell his happy horse bleep while shareholders were hurting.
What is it with this guy? You have to question his judgement and not just because he let his daughter appear on the VH1 reality TV show Filthy Rich Cattle Drive, a show that “involves a City Slickers/The Simple Life-like premise, with the privileged children of celebrities working on a Colorado cattle ranch.” This show was beyond pathetic.
This outward confidence in the business masks the reality that there have been 45 sells by insiders totalling 8.2 million shares and not one single buy in the open market.
Check out the insider transactions. It is ridiculous how much stock these guys have given themselves.
CEO Terry Semel sold stock this year worth more than $244 MILLION. What makes this all truly obscene is that Semel exercised his right to purchase 7 MILLION MORE SHARES at prices between $5-$15 per share. Not a bad deal considering that Yahoo stock never went below 30 the entire year. Shareholders pay full price, insiders get shares that are already up more than 100%. The stock would have to drop another 80% before he lost any of his own money, no wonder Semel “feels great” about “our” company.
The story is not any different for COO Daniel Rosensweig who sold approximately $105 MILLION in stock this year. He exercised his right to purchase stock options eleven different times this year, each time the grant was 76,000 shares at discount price of 7.03 per share. What a racket.
I understand that stock options are a big part of attracting and retaining executives, but what Yahoo is doing seems pigish, excessive and not in the best interest of shareholders. If they are selling like crazy, why wouldn’t you?
UPDATE: Maybe the SEC is reading Pundit Review?
SEC seeks to pull covers off exec pay
By Mark Schwanhausser
San Jose Mercury News
It will be easier for the public to discover the million-dollar perks enjoyed by top executives such as Oracle Chief Executive Larry Ellison under rules federal regulators unanimously proposed Tuesday.
January 17th, 2006 at 9:16 pm
Man, you make some awesome points. This is strange, because at one time Cramer was big on this stock (may still be), and he tends to be turned off by these things.
I’m going to link to this in my AM-Coffee post tomorrow morning. I’ll have to wait until that time because pings on deferred posts go out there before the posts post, which really “bytes.”
January 17th, 2006 at 9:26 pm
Thanks Tom. I believe that Cramer owns YHOO for his charitable trust. I never hear him talk about this issue w/ YHOO. Maybe I’ll send him an email.:)
If you want the opposite of YHOO, check out Chesapeake Energy. Their CEO and President have been buying shares like crazy, with their own money, in the open market.
http://finance.yahoo.com/q/it?s=CHK
I’ll take that any day over the pigs at YHOO.
Kevin
January 18th, 2006 at 8:27 am
[...] Yahoo management: Pigs at the Trough — Kevin at PunditReview, who should consider a career as a stock analyist questions the actions, particularly the insider sales made of Yahoo! management, against their rosy pronouncements. So do I. [...]
January 19th, 2006 at 8:44 pm
Until someone who is totally divorced from the company can comment freely and give the schlubs in the real world the skinny on a corporations stock and condition, the owners and CEOs have little incentive to be straight with us. It goes back to the time that Joseph P Kennedy was the head thief-er-ah-first chairman of the SEC under that wonderful liberal FDR.
March 20th, 2006 at 11:27 pm
[...] When insiders behave like pigs, investor’s should look for the exits. Filed in: Economics | No Comments » [...]
April 17th, 2006 at 8:09 am
[...] I am no fan of overinflated CEO pay packages. For example, I have written previously about the pigs in Yahoo’s executive management and their obscene use of stock options. [...]
April 18th, 2006 at 10:29 pm
[...] When Yahoo reported earning in January, we questioned their management and their generous stock grants to…themselves. I understand that stock options are a big part of attracting and retaining executives, but what Yahoo is doing seems pigish, excessive and not in the best interest of shareholders. If they are selling like crazy, why wouldnâ??t you? [...]
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November 6th, 2008 at 11:05 pm
[...] has gone from one of the greediest CEO’s to one of the [...]