http://online.wsj.com/article/SB10001424052970204358004577028631368178256.html?mod=rss_Technology

Jerry Yang is a hardworking kind of guy.  Yang is founder, board director, and Chief Yahoo.  I think his actions regarding the aborted sale to Microsoft was a disservice to all Yahoo shareholders.  Today the company is struggling and fighting for survival.

Today, Yang is seeking to form a new ownership group to buy up a substantially larger portion of Yahoo than Yang already owns.  Is this a conflict of interest?  Technically, no.  However, how does the average person define conflict of interest?

Frankly, I do not know the legal definition of “conflict of interest” but I learned a long time ago that the best smell test is “if something smells fishy then there is probably something wrong going on”.  Ever hear the old phrase: “if it walks like a duck, quacks like a ducks, and looks like a duck it probably is a duck”.

Yang has hired an attorney because he knows that without one he runs the risk of crossing that fine line of conflict of interest.

Now is what Yang is doing right?  That is the issue.  Corporate officers may be doing something perfectly legal but morally wrong.  Unfortunately, just because something os morally wrong does not make it illegal.

Is what Yang doing wrong?  In one sense the answer is No.  In another sense the answer is Yes.  Yang and his cohorts on the board on the reason why Yahoo is where it is today – financial losses and no one real plan to bail itself out of the hole he put the company in.  No shareholder in their right mind would trust someone who went so far as to kill a deal that was worth $40B to Yahoo only to have the company now struggling to find its way.   Most CEOs would have been fired.  However, Yang is not the CEO, he is just the Chief Yahoo; whatever that means.

Are Yang’s current actions to buy a substantially larger piece of Yahoo, which is worth much less than it was a couple of years ago thanks to Yang, a conflict of interest?  Does Yang sit on the board of directors of Yahoo? Yes.  Does Yang sit on the transaction committee or the strategic review committee?  No.  So is the fact he is seeking to buy a larger piece of Yahoo illegal?  I guess the answer is No because if it were the SEC would have been knocking on his door by now.

Are Yang’s actions wrong?  That is a whole other story.  Think about it.  Yang and Filo own about 10% of Yahoo.  Yang killed the Microsoft deal, which trashed the company’s valuation.  Yang can now pick up a piece of Yahoo cheap.  Yang is such a powerful presence on the Yahoo board that for any other C-Level officer, killing the Microsoft deal would have resulted in that C-Level officer losing their job in a blink of an eye.   Yang still has a job.  Keep in mind, Yahoo is a publicly traded company hence it does not belong to Yang.

The picture is not pretty but I guess it is not illegal.  However, I am not sure if there is a conflict of interest or not.