Carol Bartz's run as Yahoo CEO ended unceremoniously last week with a cellphone call. But now the spotlight turns to the guy on the other end of the line, Yahoo's chairman -- and former adman -- Roy Bostock.
All Eyes on Adman Bostock as Yahoo Searches for New CEO, Vision
Yahoo's missteps of the past several years have been strikingly varied, from spurning a takeover bid by Microsoft to the appointment of a CEO with no experience in the internet or in Yahoo's core business, advertising. But there's been one constant: the leadership of Mr. Bostock, who joined Yahoo's board in 2003 and became board chairman in 2008.
He's a familiar face to many in advertising, where over a 38-year career he rose up from media and account planning to engineer the merger of Benton & Bowles with D'Arcy Masius, creating one of the biggest privately-held ad firms of its day. That success led to no shortage of confidence, but hasn't translated from Madison Ave. to Silicon Valley.
Mr. Bostock -- who could not be reached for comment for this article -- was not known in the ad business so much as a visionary, but more as a consigliere to clients and, at times, a ruthless manager. One former colleague said he mastered the ad business "on a surprisingly granular level" and did not hesitate to fire an executive who didn't see eye-to-eye with him. (Though another person who knows Mr. Bostock noted firing by phone is decidedly not his style.) Rather than seek a replacement before firing, his attitude was more like, "Do it my way or I'll step into your role and do it myself." In Mr. Bostock's case, a person with knowledge said, "he could do it because he knew how to do it."
Ultimately, DMB&B was involved in a series of deals, including a merger with Leo Burnett that led to the $3 billion purchase by Publicis Groupe in 2002. Mr. Bostock retired that same year and served on a succession of corporate boards, including Delta and Morgan Stanley, which during the financial crisis put him in the room for discussions with Treasury Secretary Tim Geithner.
But unlike DMB&B, at Yahoo he was thrust into a tech world he knew little about. When Mr. Bostock arrived in 2003, the sales side of the business was thrilled; finally there was someone on the board with a background in a business that actually generates Yahoo's revenue, brand advertising.
"He was helpful in helping them understand what advertising was all about," said one former exec. But execs interviewed by Ad Age said that Mr. Bostock was miscast as chairman. Inasmuch as Yahoo derives its revenue from advertising, it ultimately thinks of itself as a tech company, and the technologists on the board were reluctant to follow his lead, they said.
Mr. Bostock's arrival marked the beginning of Yahoo's struggle to stay competitive, first losing the search battle with Microsoft and then missing the next evolution, when the web went social. "The board and management wasn't aggressive enough and smart enough to say, "the evolution of the internet isn't over, so what's next?'"said Wall Street analyst Douglas McIntyre.
The minute Mr. Bostock became chairman in 2008, he had to fend off an attempt by Carl Icahn to oust the board and force a deal with Microsoft. Last week shareholder calls for Mr. Bostock and the rest of the Yahoo board to resign intensified. Wrote hedge-fund manager Daniel Loeb, whose Third Point Capital owns 5.1% of Yahoo shares, to the SEC: "We insist that Mr. Bostock, who championed Ms. Bartz's hiring and led the charge against the Microsoft deal, promptly resign from the board."
Mr. Loeb is hardly alone. "Roy J. Bostock has made more mistakes than any media company chairman in recent memory," wrote Mr. McIntyre. Ms. Bartz delivered her parting shot, telling Fortune, "The board was so spooked by being cast as the worst board in the country," Ms. Bartz said. "Now they're trying to show that they're not the doofuses that they are."
With the benefit of trailing wisdom, the call that 's most damning is the rejection of Microsoft's sweetened $33 a share offer for the company in 2008, the year Yahoo separated the CEO and chairman positions and elevated Mr. Bostock. Yahoo shares are down 49% since that move. Paul Hodgson, a senior research associate at the Corporate Library, said it's notoriously difficult to remove a board for performance, and shareholders have little recourse other than withholding their votes at the next annual meeting.
The only two directors that had votes withheld at the last meeting were Ms. Bartz and Mr. Bostock, Mr. Hodgson said.
Now, Yahoo is once again looking for a savior, shining a harsh light on Mr. Bostock and the board he leads. "There have been so many departures of people I think it will be difficult to replace the talent that went out the door," said David Karnstedt, who left Yahoo in 2009 and became CEO of Efficient Frontier. "Whoever is the next CEO will have to focus on retaining the good talent and attracting new talent to Yahoo."