Yahoo agrees to put investor Icahn on expanded board, proxy fight ends

Yahoo Inc. said Monday it has agreed to settle a proxy battle with Carl Icahn, appointing him to an expanded board.

Icahn owns a 5 percent stake in the Sunnyvale-based Internet company (NASDAQ:YHOO) and had been battling company leaders after they rejected a bid by Microsoft Corp. (NASDAQ:MSFT) to buy the company.

Eight of Yahoo's existing directors will now stand for re-election to an expanded 11-member board, including Chief Executive Officer Jerry Yang. Robert Kotick won't.

Content Continues Below

Icahn had proposed an alternate slate of directors that supported his plan to sell all or part of the company to Microsoft.

Legg Mason Capital Management Inc., which owns 4.4 percent of Yahoo, last week backed Yahoo's current slate of directors and urged the two sides to settle their fight before the Aug. 1 annual meeting.

Icahn said in a statement he's pleased with the settlement. "While I continue to believe that the sale of the whole company or the sale of its Search business in the right transaction must be given full consideration, I share the view that Yahoo's valuable collection of assets positions it well to continue expanding its online leadership and enhancing returns to stockholders."

"We are gratified to have reached this agreement, which serves the best interests of all Yahoo stockholders," said Yahoo Chairman Roy Bostock. "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."

Yahoo CEO Jerry Yang -- who Icahn has said should be replaced in that post -- said, "This agreement will not only allow Yahoo to put the distraction of the proxy contest behind us, it will allow the company to continue pursuing its strategy of being the starting point for Internet users and a must buy for advertisers."