Yahoo has announced an agreement with billionaire investor Carl Icahn that should put off a proxy battle battle at the company’s shareholder meeting August 1. Under the deal, Yahoo will expand its board of directors from nine to eleven members; eight of those members will be current board members standing for re-election—including CEO Jerry Yang—while the other three seats will be filled by Carl Icahn himself and two of the nine board candidates put forward by Icahn’s group of investors.
“We are gratified to have reached this agreement, which serves the best interests of all Yahoo! stockholders,” said Yahoo chairman Roy Bostock, in a statement. “We look forward to working productively with Carl and the new members of the Board on continuing to improve the Company’s performance and enhancing stockholder value.”
The move avoids a proxy battle on August 1 in which Icahn was threatening to take over the company by putting forward his own slate to occupy Yahoo’s board; Icahn (who owns roughly five percent of Yahoo) has been outspoken in his dismay that the company turned down a $44+ billion takeover offer from Microsoft, and has made no secret of his desire to take Yahoo back to Microsoft’s doorstep and offer the company up for sale, in whole or in part. Yahoo’s existing leadership has repeatedly said it remains open to a possible deal, but proposals so far have undervalued the company. Icahn’s effort to take over the company had been deemed a long shot, though, with major investors lining up behind the existing Yahoo leadership. Nonetheless, the constant negativity associated with Icahn’s proxy effort was taking a toll on Yahoo’s leadership and perception in the business community.
The settlement doesn’t mean Yahoo’s troubles are entirely over: Icahn emphasized he continues to believe the sale of Yahoo (or part of Yahoo) is in the best interest of the company, which means Yahoo’s board is likely to be split between members looking to make sales for quick dividends and members looking to secure Yahoo’s long-term business model. But Yahoo’s leadership seems relieved to be able to put the negativity of Icahn’s actions behind them. Yahoo CEO Jerry Yang said in a statement “This agreement will not only allow Yahoo to put the distraction of the proxy contest behind us.” And that seems to have been the main idea.
