November 18, 2008 8:14AM

In the Hands of Yahoo’s Board

By Ray Hennessey

A lot's been written about Jerry Yang's personal unwillingness to sell Yahoo to Microsoft earlier this year, but the board of directors shares some of that criticism. Now comes a chance for the board to either try to redeem itself or confirm that its head remains firmly in the sand.

Yang has said he will step down as CEO once a successor is found. Now the focus has to be on what type of executive the board chooses. Is it someone who can repair the strained relationship with Microsoft and get some deal together to boost shareholder value for Yahoo, or will it be someone who, like Yang, believes that Yahoo can go it alone? In short, by voting for a new CEO, the board will also be voting whether to potentially put Yahoo up for sale.

One thing is clear: Yang's decision not to run into Microsoft's arms has cost Yahoo shareholders dearly. Microsoft offered $31 a share. Yahoo closed Monday at $10.63. Yahoo shares are looking to rise Tuesday on news of Yang's resignation. If that isn't a clear sign for the board of what direction the shareholder base wants to pursue, I don't know what is. This time, perhaps, the board will listen.