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Yahoo Gives Icahn 3 Directors' Seats

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The Associated Press

Published: July 22, 2008

SAN FRANCISCO - Yahoo averted a showdown with rabble-rousing investor Carl Icahn on Monday by giving him three seats on its board of directors in a truce that still leaves the door open for a possible sale to Microsoft.

The compromise spares Yahoo from more bickering with Icahn, an acerbic billionaire who had spent two months spearheading a rebellion to replace the Internet company's board in retaliation for its rejection of Microsoft's $47.5 billion takeover bid in May.

The duel had been scheduled to culminate in a shareholder vote at Yahoo's Aug. 1 annual meeting.

It now appears there will be fewer fireworks at that gathering, though some Yahoo shareholders are expected to vent about the board's inability to get a deal done with Microsoft after six months of wrangling.

The main order of business will be the cease-fire giving Icahn three of the 11 seats on Yahoo's board, which will be expanded in the deal.

Eight of Yahoo's nine directors will be retained. That leaves the company's current regime - headed by Chairman Roy Bostock and chief executive Jerry Yang - in the driver's seat.

Robert Kotick, the CEO of video game maker Activision Blizzard and a Yahoo director for five years, will surrender his seat as part of the agreement.

But the compromise, negotiated over the weekend, does not necessarily settle Yahoo's fate, which has been unclear since Microsoft made its first unsolicited offer in January.

Icahn, who owns a 5 percent stake in Yahoo, emphasized he still believes a sale may still be the best way for the Sunnyvale, Calif.-based company to lift its sagging stock price.
Yahoo shares fell 78 cents, or 3.5 percent, to $21.67 Monday.

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