Just when you thought that the Yahoo shareholder meeting might be calm, proxy advisory service Glass Lewis & Co. has recommended that three board members, including the chairman, be shown the door. According to the Wall Street Journal (which seemed to have a scoop on the story this morning):

In a prepared report, Glass Lewis said shareholders should vote against the re-election of Yahoo Chairman Roy Bostock and directors Ron Burkle and Arthur Kern. All three are members of the company’s compensation committee, which Glass Lewis criticized for implementing controversial severance plans and for failing to pay executives relative to the company’s performance.

The gripe is that when Microsoft provided an unsolicited and presumably unwelcome bid, the committee put into place a whopper of a severance plan that would pay out so much to employees fired after an acquisition that it would discourage the deal in the first place. Although directed at Microsoft, it also became a de facto poison pill against anyone else interested in Yahoo as well.

This could have a noticeable impact at the meeting, because institutional investors pay close attention to what a Glass Lewis or ISS suggests. Yahoo is expanding its board by two to accommodate the deal with Carl Icahn, so the company only plans on replacing one with Icahn, which wouldn’t be enough to calm the waters. If ISS comes out the same way, it could be that those pushing for major change could gain a lot of ground.

I wish I had the records to see how quickly the decision was made in relation to when the board announced that it had considered the Microsoft offer and refused it. Could it be that the board went into the discussion with its mind already made up? Say you weren’t being coy, Roy.

Exit door image via Flickr user urbanshoregirl, CC 2.0