Major Yahoo Shareholder Wants Vote Probe
Yang has been under pressure for months over failed negotiations to sell the company to Microsoft and regarding questions about his leadership, but Friday's shareholder vote suggested the tide was turning in his favor.

News of questions over the vote was first reported by the D: All Things Digital blog. AllThingsD cited unnamed sources saying two major Capital Research and Management funds holding about 16 percent of Yahoo shares had recommended withholding their votes in favor of Yang in protest over his performance.

Capital Research Global Investors, the fund group led by portfolio manager Gordon Crawford, was more strongly opposed to Yang than its sister fund, Capital World Investors, which was less critical, according to sources quoted by AllThingsD.

Yang received 85.4 percent support in the results announced on Friday, with the remaining votes withheld in protest.

"I guess Jerry Yang didn't come out of the meeting as unscathed as it seemed," Canaccord Adams analyst Colin Gillis said of the uncertainty raised by calls for a recount.

Investors holding nearly 76 percent of Yahoo's 1.38 billion shares gave solid support for all nine board directors, with the lowest level of support for long-time board member Arthur Kern, who drew 77.9 percent.

Sanford C. Bernstein analyst Jeffrey Lindsay said informal polling his firm had done among major investors showed widespread dissatisfaction with Yahoo's handling of talks with Microsoft, which the broker expected to translate into a more substantial number of withheld votes for directors.

"We were surprised at the very high vote counts that were pro Jerry Yang," Lindsay said. "Certainly the final results seemed very different from the exit polls."

Yahoo said in a statement it was not party to any errors that may have been made in the voting process.

"The independent inspector of elections certified the results of the election and Yahoo accurately announced those results," the company said in an e-mailed statement.

But Yahoo left open the possibility that some intermediary may have made a mistake.

"Yahoo did not participate in the execution of the votes and was not a party to any errors which may have been made either by a voting institution or a proxy processing intermediary acting on behalf of banks, brokers and institutions," it said.

Crawford, whose Capital Research Global Investors owned 6.2 percent of Yahoo as of early June, said in May he was "extremely angry" at Yang over the breakdown of talks with Microsoft.

Capital World Investors held 9.8 percent of Yahoo shares, according to recent regulatory filings.

A Capital Group spokesman said the Crawford-run fund had inquired with Broadridge Financial Solutions , a financial services intermediary that handles proxy processing services for it.

"Capital Research Global Investors asked Broadridge Financial to double-check the votes it transmitted to Yahoo on its behalf," said Chuck Freadhoff, a spokesman for the Capital Group and its affiliates.

The spokesman declined to comment on how Capital-affiliated funds had cast their votes.

Broadridge declined to comment.

Gillis at Canaccord Adams said a somewhat lower vote was unlikely to materially weaken Yang's position, which looks secure unless Yahoo's third-quarter results fall short amid a worsening economy or if the stock remains stuck around $20 in the months to come.

"I think Jerry (Yang) is still firmly in place until some deviation happens from the plan Yahoo has set forth," he said.