Lessons learned so far from the Microsoft-Yahoo takeover fight – Marc Andreessen

Famed Internet entrepreneur Marc Andreessen teamed up with two corporate lawyers to publish some lessons already learned from Microsoft’s attempt to take over Yahoo. For example:

• Staggered three-year board terms, with only one-third of the board members being elected each year, would have made it easier for Yahoo to resist a hostile takeover.  With a staggered board, Microsoft probably would have had to win two or even three successive annual proxy fights to completely take over Yahoo.

(Of course, staggered boards are a bête-noir of some shareholder activists who have been pressuring public companies in recent years to switch to annual election of the entire board.)

• Multiple classes of stock, presumably with Yahoo’s co-founders controlling at least one other class of stock, would have required Microsoft to win over a majority of the shareholders of each class. According to Andreessen, Google has a dual-class structure that gives co-founders Larry Page and Sergey Brin, along with CEO Eric Schmidt, an effective veto over any takeover or other transaction requiring shareholder approval. Andreessen says, "You can bet that this is being noticed by the founders of every technology company that might go public from here on out."