Tech

Here's The Point-By-Point Takedown Of AOL Management Everyone Is Talking About

Nicholas Carlson

2012-05-25T10:46:00Z

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Starboard Value, a fund that owns 5.3% of AOL, wants other shareholders to vote out several board members at the company's upcoming June annual meeting.

To make the case, it has released a brutal, point-by-point takedown of AOL management.

The document is highly critical and its getting coverage all over: At Forbes, AllThingsD, and Romenesko.

Here's AOL's response

AOL HAS THE RIGHT TEAM AND STRATEGY IN PLACE TO FURTHER
ENHANCE STOCKHOLDER VALUE

AOL has made significant operational and financial progress since spinning off from Time Warner only two and a half years ago.
AOL has a clear, concise, and publicly communicated growth plan and is on track to meet its strategic goals.
AOL’s stock is a top performing stock in our industry year-over-year and year-to-date.
AOL stock is up 166% since its low as a direct result of the action taken by AOL’s management and Board.
AOL’s Board nominees are diverse and have significant operational, financial and public board experience in AOL’s areas of strategic focus.
All of AOL’s senior management and directors own stock in the Company and AOL’s Chairman and CEO is the single largest individual investor in the Company.
Starboard’s slate does not have a long-term strategy or relevant industry experience.

AOL’S CLEAR STRATEGY IS DELIVERING IMPROVED RESULTS

The Board has unlocked over $1.7 billion in value in the last two years.
AOL has returned capital to stockholders by buying back 14% of outstanding shares, and has committed to return all of the proceeds of the almost $1.1 billion patent sale to stockholders.
AOL has reported three consecutive quarters of better than expected earnings results, which demonstrate that the Board’s strategy is working.
The Board has presided over significant improvement of AOL’s operations and financial results, including reducing annual costs by approximately $500 million prior to investment in areas of strategic focus, reducing headcount by 37%, ending unfavorable distribution deals and exiting unprofitable markets.

STARBOARD DOES NOT HAVE A LONG-TERM STRATEGY
AND THEIR NOMINEES DO NOT HAVE THE RIGHT EXPERIENCE

Rather than present a reasoned strategy for driving stockholder value, Starboard has simply criticized AOL’s long-term strategy and investments in content-based assets, and we believe their goal is to break-up and liquidate the company.
AOL’s Board of Directors is diverse and highly qualified. The AOL Board has significant operational, financial and public board experience.
On the contrary, we believe Starboard’s nominees would negatively impact the Board’s level of industry expertise, public company experience and diversity.
AOL is actively engaged in seeking two new Board members, but believes Starboard’s slate will damage the Company and its relationship with advertisers.
Notwithstanding the negative impact of Starboard’s last four public statements with respect to AOL’s strategy, AOL’s stock hit a 52-week high this week, based on AOL’s operating execution, strategic momentum, and continuing to unlock stockholder value.