Time Warner Warns: Jonathan Miller Cannot Join Yahoo Board
“Non-compete clause freezes former AOL chief till March.”
New York – Time Warner Inc. said on Friday that it had barred the nomination of Jonathan Miller, the former chairman and chief executive of its AOL Internet unit, from joining Yahoo Inc.’s board until March 2009.
“Yahoo! CEO Jerry Yang may wish that former AOL CEO Jonathan Miller joins his company’s board, but Jeff Bewkes does not.”
Miller was named as one of three potential new board members at Yahoo on July 21, as part of a settlement to quell activist investor Carl Icahn angst that averted what had promised to be a bitter proxy battle.
A source familiar with the matter said Miller had believed that Time Warner would not prevent him from joining Yahoo because top executives at the media company had “greenlit” it, until he was told otherwise on Thursday night.
In a statement, Time Warner said Miller had signed an agreement with Time Warner not to work for any of its competitors, including Yahoo, until March 2009.
Under a July 21 agreement with the rebellious shareholder Icahn, Yahoo had agreed to expand its board to 11 directors and to appoint Icahn and two others it would choose from a list that included Miller and eight others previously nominated by Icahn. Yahoo had asked that Miller, who is a founding partner of investment firm Velocity Interactive Group, be added to the list, and his selection was considered likely.
Time Warner’s decision surprised Yahoo and Miller, as both had been given indications by Jeffrey Bewkes, the chief executive of Time Warner, that the company would not object to his joining the Yahoo board, according to three people with knowledge of the discussions who spoke on condition of anonymity because the discussions were considered confidential.
But a Time Warner spokesman, Edward Adler, said Friday that Bewkes “never gave the green light” to a waiver of Miller’s non-compete agreement.
Requests for comment from representatives at Yahoo, AOL, and Time Warner were not immediately returned.
Sources close to the matter viewed the favorable press that Miller has been getting, which included a flowery profile in the Los Angeles Times, as a campaign coordinated between him and former AOL corporate communications boss John Buckley, who left the company with Miller in 2006.
“He is running for a job he knew he could not take,” said one source.
A Time Warner spokesman said the clause had never been waived.
“When Jonathan Miller signed his contract it specifically stated that, upon payout of the contract he could not work for a variety of competitors including Yahoo until March 2009," a Time Warner spokesman said.
The news comes as Yahoo’s shareholders attend its annual meeting to elect a new board of directors.
“Yahoo is not happy about this development,” said the source, who was not authorized to speak on the record.
Miller, who is a partner at Velocity Interactive Group, an investment company, was forced out of AOL in 2006 after Randy Falco joined the company from NBC — his relationship with some AOL executives has been strained since then.
His selection by the Yahoo board could have brought him back across the negotiating table from some of those executives. Yahoo has explored the possibility of a merger with AOL as an alternative to Microsoft’s Jan. 31 offer to purchase Yahoo, or later, its search business. The conversations are continuing, according to people with knowledge of the discussions.
Miller declined to comment. Sources close to Yahoo!, said that in the absence of Miller the company will now select two board candidates from Icahn’s slate by Aug. 15. Top choices include former Nextel Partners chief John Chapple, former Viacom CEO Frank Biondi Jr. and former Grey Global Group CEO Edward Meyer, these people said.
In the meantime, Yahoo! Chairman Roy Bostock protected the board’s strategy in dealing with Microsoft at the company’s annual shareholder meeting.
Bostock said there has been a lot of “misinformation” about the board’s participation with Microsoft boss Steve Ballmer, responding to criticism that the board turned negotiations over to the company’s co-founders Yang and David Filo, who did not want to sell Yahoo! to a rival.
“We called the shots,” Bostock said referring to the board, who he said has had more than 30 meetings over the last six months. “At no point did the board and management ever resist Microsoft’s proposal. They reduced their engagement level.”
Undoubtedly, corporate business can be inconsistent. Yang, who has been on the receiving end of shareholder ire over the handling of Microsoft’s $33 a share buyout offer and its subsequent withdrawal, has also faced a call for his removal as CEO by Icahn.
“News of Miller possibly not joining Yahoo’s board was first reported by the Los Angeles Times on Friday.”