Yahoo! settles proxy contest with Carl Icahn

By Susanna Moon

Chicago, July 21 - Yahoo! Inc. said it reached an agreement with Carl Icahn to settle their proxy contest related to the company's 2008 annual shareholder meeting, allowing him a seat on the company's board of directors.

Under the agreement, eight members of Yahoo!'s current board of directors will stand for reelection at the 2008 annual meeting: Roy Bostock, Ronald Burkle, Eric Hippeau, Vyomesh Joshi, Arthur Kern, Mary Agnes Wilderotter, Gary Wilson and Jerry Yang.

Robert Kotick will not stand for reelection to the board given the agreement with Icahn and the termination of the proxy contest, according to a press release.

Following the meeting, the Yahoo! board will be expanded to 11 members.

Along with Carl Icahn's appointment to the board, the remaining two seats will be filled with the recommendation of the board's nominating and governance committee from a list of nine candidates recommended by Icahn, The list includes the eight remaining members of the Icahn slate of nominees and Jonathan Miller, a partner in Velocity Interactive Group and former chairman and chief executive officer of AOL.

As part of the agreement, Icahn, who owns 68,786,320 shares, or 4.98%, of Yahoo! common stock, agreed to withdraw his nominees for consideration at the annual meeting and to vote his Yahoo! shares in support of the board's nominees.

The company said it plans to file the full text of the settlement agreement on Monday with the Securities and Exchange Commission.

On July 17, the company asked its shareholders to support the company's current board of directors, and not Carl Icahn's dissident slate, at the annual meeting on Aug. 1.

Chief executive officer Jerry Yang and chairman Roy Bostock, in a letter to shareholders, accused Icahn and Microsoft Corp. of making misleading statements about their plans for Yahoo!

Yang and Bostock said at the time they believed the Icahn/Microsoft alliance will destroy stockholder value at Yahoo!

According to the letter, Icahn, a well-known "corporate agitator," bought Yahoo! stock two months ago for an estimated average cost of less than $25 per share, giving him "a strong incentive to strike any deal with Microsoft" to recover his investment.

In June, Yahoo!, a Sunnyvale, Calif., internet services company, announced that its discussions with Microsoft regarding a potential transaction had ended.

Microsoft withdrew its proposal to acquire Yahoo! for $31 per share, or some $44.6 billion, in May after Yahoo! failed to move toward accepting the Redmond, Wash., software company's increased offer, according to a prior news release.

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