Yahoo board urges shareholders to snub Icahn

Yahoo chief executive Jerry Yang - who Icahn has said he would sack if he manages to replace the Yahoo board with his own executives - and chairman Roy Bostock, have both  called on shareholders to reject Icahn's proposals at Yahoo's AGM on 1 August, and instead, vote to reinstate the current board.

Bostock and Yang's plea described the forthcoming meeting as "the most important for stockholders in our history" and stressed that the current board is focused on one goal: "how best to maximise stockholder value".

The Yahoo chiefs said in a statement: "You are probably aware that Carl Icahn proposes to replace our entire board of directors with his hand-picked slate. Mr Icahn has no credible plan except to sell the company to Microsoft. Given Microsoft's stated position of not wanting to acquire Yahoo, the election of Mr Icahn's slate could result in substantial erosion of stockholder value."

Icahn has spent billions of pounds in recent months to build his stake in Yahoo to approximately 4%, making him one of the company's single biggest shareholders.

Yahoo's proxy statement continued: "We urge you to act now to protect your investment by rejecting Mr Icahn's slate and by voting for our board today, by telephone, internet, or by signing, dating and returning the enclosed white proxy card."

In a letter to Bostock last week, Icahn said that if his proposed board gains control of Yahoo, he would push the new board to offer publicly to sell Yahoo to Microsoft, "in a friendly and cooperative transaction". Should Microsoft not be interested in a deal after such a statement, he said, he would then push for a deal to outsource its search ads to Google.
Icahn added: "I intend to ask our new board to hire a talented and experienced chief executive(attempting to replicate Google's success with Eric Schmidt) to replace Jerry Yang and return Jerry to his role as 'Chief Yahoo'."
Earlier last week, Icahn called on the Yahoo board to scrap an employee retention plan, that he claimed drove up the potential costs of a Microsoft takeover attempt to a prohibitive level. In a letter, he labeled the action a "poison-pill" - a corporate term that describes a company policy that deters would-be suitors from buying a company.

The employee retention plan could trigger payments of up to $2.4bn (£1.2bn) if Microsoft pulled off a successful takeover, by ensuring that employees are handed severance payments in the event of a company takeover