Yahoo settles with activist investor Icahn

Some shareholders still want more even more new faces on Yahoo’s board after watching the company’s market value plummet by more than 40 percent, or about $20 billion, since the end of 2005. All but one of Yahoo’s directors — Maggie Wilderotter — have been on the board since 2005 or earlier.

“I am still very angry at this board, and I am sure other shareholders feel the same way,” said Eric Jackson, who manages a hedge fund, Ironfire Capital, that’s organizing a protest on behalf of about 150 Yahoo stockholders with about 3.2 million combined shares.

Jackson said his group plans to show its displeasure by opposing the re-election of four Yahoo incumbents — Bostock, Ronald Burkle, Eric Hippeau and Arthur Kern. More than 30 percent of Yahoo’s shareholders voted against Bostock, Burkle and Kern at last year’s sharelholders meeting, with Jackson leading the fight.

The shareholder angst could intensify if Yahoo’s second-quarter earnings, due Tuesday, disappoint Wall Street. Analysts are bracing for a letdown after Google and Microsoft indicated last week that the deteriorating economy is hurting the online ad market.

After spending weeks ridiculing Yang and the rest of Yahoo’s board, Icahn apparently realized he had little hope of gaining control of the company.

Things began to unravel July 12 when Yahoo rejected Microsoft’s latest proposal to buy its online search operations in a complex deal assembled in concert with Icahn.

Yahoo board emerges mostly unscathed Pickens rips Yahoo management, dumps shares Yahoo settles with activist investor Carl Icahn Congress holds hearings on Yahoo-Google deal Yahoo spurns Micosoft again as blood boils Microsoft seeking allies for new Yahoo move Yahoo’s board takes its case to shareholders Yahoo shakes up management team

Then, on Friday, Legg Mason Capital Management Inc. became the first major Yahoo shareholder to publicly declare its support for the incumbent board. Legg Mason, which controls 4.4 percent of Yahoo shares, also encouraged Yahoo and Icahn to negotiate a compromise.

Yahoo’s new board may include a possible successor to Yang, whom Icahn had threatened to fire if his attempted coup had been successful.

Besides taking a board seat himself, Icahn will be able to recommend two other directors who must also be accepted by Yahoo’s nominating committee.

To fill those spots, Icahn will choose from the eight men he had already nominated and one new candidate — Jonathan Miller, the former CEO of Yahoo rival AOL. Miller is the kind of seasoned CEO that Icahn envisioned for Yahoo.

But throwing Miller into the mix of Yahoo’s new directors was Yang’s idea, according to a person familiar with the discussions who asked not to be identified because the talks were considered confidential.

While sparring with Icahn and Microsoft, Yang had also been talking to Miller — a partner at the technology investment firm Velocity Interactive Group — and decided he would be a valuable addition to the board, this person said.

Icahn didn’t return a call seeking comment Monday.

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