Yahoo: CEO Transitions in the Digital Age

Today we look at the other side of the coin regarding the departure of Yahoo's former CEO, Carol Bartz. Yesterday, I examined this "transition" from her perspective, and that of Yahoo employees generally. Now let's say that Yahoo had good reason to make a move right now (maybe it was overdue). And let's also acknowledge that companies have to be very careful about what they say when an employee leaves, even a CEO. Ms. Bartz does not feel as constrained, given her comments yesterday to Fortune. (Some question whether her remarks cross the line of disparagement, and thus perhaps voiding her severance agreement.) The problem facing Yahoo (and any large public company in a similar situation) is what I call the paradox of the possible versus the prudent. In Yahoo's case, sure, almost anything is possible. You can fire your CEO over the phone. You can (allegedly) give her a short fuse of a few hours to decide whether she will "resign" or be fired and take legal steps to make this all happen. (This is all from her side, based upon the Fortune interview). Again, we are in the digital age, and I think we can conclude that Ms. Bartz understands this and is not afraid of it. It is also possible to put out a cookie-cutter press release after these events, calling this a "Leadership Reorganization." So it is clearly possible to handle a CEO transition like this. They did it. But was it prudent? Does board chairman Roy Bostock really understand the realities of the digital age? You would hope so, since he is chairman of the company, Yahoo, that was there first, at the inception. These realities include that every step of this process will be examined in print by old-line publications, and new-age random bloggers. So my wild guess is that there was a debate internally at Yahoo as to how to remove Ms. Bartz as CEO. Let's imagine a hypothetical where the Bostock camp (the "possibles") won out over the "prudents" camp, with their unnamed leader advocating a more deliberate approach. The general counsel in a situation like this cannot easily take a lead role. He or she needs to explain the range of what is possible, and, assuming a strong relationship with the board chairman, offer advice as to what is prudent if asked. But the GC needs to be ready to execute the possible plan, at hyper-speed, if that is the decision. Remember we are talking about terminating the CEO here, so there is no decision-making triangle of chairman-CEO-GC like there is on other major strategic matters. In a case like this, the GC has to be careful to retain the confidence of the board chairman. You would think (hope?) that hypothetically one of the self-titled "Chief Yahoo" founders Jerry Yang or David Filo would have championed the "prudent" position, at least to foster a healthy debate. Maybe one or both of them knew Ms. Bartz well enough to conclude that a more deliberate, even prudent approach, was im-possible. There is also the possibility that chairman Bostock consulted outside counsel on this. Many law firms have a bias toward the "possible." Some senior partners are walking and talking champions of the possible: "You are within your contractual and legal rights to terminate the CEO in this manner. We can have the termination papers prepared in 60 minutes and will have lawyers present on-site to serve the CEO with those papers in 90 minutes." The possible always seems more decisive. Advocates of the prudent will use up almost all of their goodwill with other board members and senior executives when pressing that option. In the digital age, no company, no matter how big, can control the story. A press release is shredded by the news and commentary cycle within 30 minutes. Some board members understand this. Others, their executive experience anchored in the analog world decades ago, have to learn this the hard way. There is an old proverb: Success has many fathers, failure is an orphan. A CEO transition in the digital age version goes something like this: The possible has many supporters; but the prudent stands alone. Since I wrote the first post yesterday, we now have a 5% plus Yahoo shareholder calling for chairman Bostock's resignation and sketchy reports that Chief Yahoo Jerry Yang may be trying to marshal resources to take Yahoo private. Could these things happen? Who knows? Anything, it seems, is possible.

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