At first I was horrified when I read what happened to Yahoo’s former CEO Carol Bartz. A phone dump? Like I think, most people, male and female, when I read the bare bones of the story — that out of the blue she’d been called by the chairman of the board Roy Bostock and given her marching orders — on the telephone — that after two and a half years in the seat she had to go — albeit with a $10 million payoff — I was appalled. Such behavior is not generally deemed okay in the dating world. A phone dump shows an appalling lack of respect for the person being dumped. In the dating world, people who do this are generally subsequently given a wide berth.
Thus, I’d never even heard of such behavior in the corporate world. And nor, as I canvassed other CEOS, had they.
“Maybe if the CEO had been arrested and was in jail for child abuse I’d do it, but only then,” said one chairman of a board with a business with a market capital of several billion dollars.
But today Financial Times columnist Lucy Kellaway says that Bartz’s subsequent overreaction to the manner of her firing is a grave mistake.
No axed CEO, says Kellaway, especially one with a vast payoff, ought to give an interview as Bartz did to Fortune magazine and call Yahoo’s former board members “doofuses,” or swear: “they fucked me,” or go on and on about the crassness of the phone dump, thereby distracting from the main point — which is that she hadn’t lived up the expectations of her shareholders and had to go. Former CEOs are supposed to shut up, smile and head for the golf course… or back to work in another company, if they don’t blow themselves up in the press first…
Kellaway says that given Bartz’s anger, Bostock did her a favor by not firing her in person — lawyer standing next to him.
Well, I think that’s not fair to Bartz — and here’s why.
A few phone calls to people in the know at Yahoo reveal the following: No one intended to fire Bartz over the phone.
The problem was that she was due to speak at a Citigroup meeting on September 7th; the Yahoo board had belatedly reached its decision to fire her and felt they must do so before this important speech to influential analysts. So, they waited for her return from abroad. And waited. And waited. Enter rain squalls — and on September 6th Bartz’s flight kept being delayed.
Hence the dramatic phone call from Bostock, which obviously stunned Bartz, who was, no doubt, at the time going over the finer points of her speech for the next day. So the real point is not that Bartz overreacted (she may have, but, clearly, she was taken by complete surprise which is in itself revealing about the cowardice of the board).
The bigger point is the board should have fired her months ago.
This is the pertinent point made in the outraged letter to the board by Daniel Loeb, the CEO of the hedgefund ThirdPoint which has a 5.15 per cent stake in Yahoo.
He calls for a new board.
Why?
Loeb writes among other things that the board should have reacted months ago to the obvious: Bartz’s lack of experience in the space and complete unsuitability for the job which has dragged the company’s stock price down to approximately $13.61 a share when he reckons it should be a round $20. Then there was what he calls her “alienation of Asian partners” and a terrible lack of communication skills (which I must confess I agree with, having watched a recent interview done with her on YouTube).
Yet as recently as June 23 the board was backing her publicly. “We believe in Carol” Bostock said.
Was he blind, deaf and dumb?
Loeb’s letter says it all: If the board had done its job months ago, then all this controversy about the etiquette of a firing phone call — which is worthy of commentary and analyzing, and hopefully will never happen again — would be completely moot. 