Yahoo will give investor Carl Icahn three seats on its board to derail a proxy fight that has been growing nastier by the day.
The concession still leaves the door open for a possible sale to Microsoft but spares the Netco from more bickering with Icahn, who has been trying to oust topper Jerry Yang for months. The financier had proposed an alternate board slate up for vote at Yahoo’s annual shareholder meeting on Aug. 1.
The shareholder’s meeting is now expected to be less contentious but some Yahoo shareholders are still expected to vent about the board’s inability to get a deal done with Microsoft after six months of wrangling. Microsoft withdrew its takeover bid, then valued at $47.5 billion, on May 3 and has been trying to buy Yahoo’s search biz instead.
Under the agreement hammered out over the weekend, Icahn will gain three seats on Yahoo’s board, which is being expanded by two. Eight of Yahoo’s current directors will be retained, including chairman Roy Bostock and Yang, but Activision Blizzard CEO Robert Kotick will surrender his seat as part of the agreement.
However, the compromise won’t necessarily end calls for Yang to step down. Yahoo shares fell 78¢ Monday to finish at $21.67 — well below the $33 a share that Microsoft CEO Steve Ballmer dangled in early May before withdrawing the bid after Yang sought $37 per share. The tech giant originally made an unsolicited bid for the Netco in late January.
Icahn will take one of the board seats and recommend two other directors who must also be accepted by Yahoo’s nominating committee. He will choose from his proposed slate and former AOL topper Jonathan Miller, the latter apparently at Yang’s suggestion. Miller, a partner at the technology investment firm Velocity Interactive Group, has plenty of experience in the Internet realm, something that can’t be said for all Icahn’s candidates.
Microsoft, meanwhile, is said to be discussing a possible acquisition of AOL, which Time Warner has been trying to unload for a while.
Icahn’s involvement on corporate boards hasn’t always paid off. He won three board seats at Blockbuster in May 2005 and, since then, the vidtailer’s stock price has plunged by about 75%.
Yahoo called the truce with Icahn on the eve of its next quarterly earnings report. The Netco will issue that report on Tuesday.
(The Associated Press contributed to this report.)