Web pioneer Yahoo has reached a settlement agreement that will expand its board of directors to include  billionaire activist investor Carl Icahn and two members of his alternate slate of directors, in a truce announced Monday that ended months of battling between Yahoo and Icahn over the Sunnyvale, California-based company's refusal to accept a takeover bid by Microsoft. Cease-Fire Reached Eleven Days Before Annual Meeting The agreement to settle came eleven days before the proxy contest was to come to a head during Yahoo's annual shareholder meeting, and meant that co-founder and chief executive Jerry Yang would no longer need to convince shareholders not to vote for the slate of directors proposed by Icahn. The settlement agreement between Yahoo and Icahn calls for eight members of the firm's board to stand for re-election, including Yang and company chairman Roy Bostock, along with Ronald Burkle, Eric Hippeau, Vyomesh Joshi, Arthur Kern, Mary Agnes Wilderotter, and Gary Wilson. Board member Robert A. Kotick, chief executive of Activision Blizzard, decided not to stand for re-election during the meeting, after which Yahoo will have eleven members including Icahn and two selections from his list of nine recommended board candidates, Yahoo said in a statement issued Monday. The Yahoo board of director's nominating and governance committee will recommend two members from Icahn's list, which included among others Mark Cuban, owner of the National Basketball Association’s Dallas Mavericks and founder of Broadcast.com, and former AOL chairman and chief executive Jonathan Miller, who is presently a partner in technology investment company Velocity Interactive Group. Immediate Microsoft Deal May Be Less Likely Miller was seen as the most likely choice among the alternate list of directors, as both Icahn and Yang have given approval according to a recent New York Times report that cited an unnamed person familiar with the details of the settlement agreement. "Carl Icahn, who owns an aggregate of 68,786,320 shares, or 4.98  percent of Yahoo common stock, has agreed to withdraw his nominees for consideration at the annual meeting and to vote his Yahoo shares in support of the board's nominees," Yahoo said in the Monday statement. The agreement came as a cease-fire in the ongoing battle between Icahn and Yahoo management, a stand-off that had produced back-and-forth letters and public statements as the two sides sought to convince Yahoo shareholders to vote for or against two slates or directors, one sympathetic to a sale of the firm to Microsoft and the other committed to keeping Yahoo independent. The agreement was seen as making it less likely that Microsoft would take control of Yahoo in the immediate future, and gave the Sunnyvale firm a sense of stability largely missing since Microsoft first offered to purchase it on February 1, an offer than eventually reached $47.5 billion. Wall Street Skeptical As Yahoo Shares Fall Wall Street reacted to the settlement with doubt about Yahoo's long-term ability to thrive as a strong independent company, as trading in the firm's stock saw a decrease of 3.47 percent, or 74 cents per share, closing Monday at $21.67. The agreement, which came only three days before Yahoo reports its quarterly earnings on Thursday, did not include any provisions that would prevent further discussions with Microsoft, a prospect Yahoo has said recently it remains open to as long as the price was $33 per share or more. A turning point leading to the settlement agreement announced Monday may have been last week's decision by Bill Miller of Legg Mason, which is one of Yahoo's largest shareholders with some 4.4 percent interest in the firm, to support Yang and the other Yahoo-nominated directors. Icahn has gained three seats on the Yahoo board in a move that appeared to be a compromise between the two sides, while Yang and other management at Yahoo were to remain in place. Icahn had said that were his bid to gain control of the Yahoo board through a proxy contest successful, he planned to replace Yang. Icahn To Pressure From Inside Of Yahoo Icahn's role as a Yahoo outsider has now shifted to that of a board member, in which he will be able to exert pressure internally no negotiate a sale to Microsoft. "I am very pleased that this settlement will allow me to work in partnership with Yahoo's board and management team to help the company achieve its full potential," Icahn said in a statement Monday. "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. I believe this is a good outcome and that we will have a strong working relationship going forward. Additionally, I am happy that the board has agreed in the settlement agreement that any meaningful transaction, including the strategy in dealing with that transaction, will be fully discussed with the entire board before any final decision is made," Icahn added Monday. The settlement was similar to another Icahn brokered earlier this year with Motorola, a deal that saw him gain two of the four board seats he had sought. Yahoo management said that it looked forward to working with Icahn as its newest board member. "We are gratified to have reached this agreement, which serves the best interests of all Yahoo stockholders," Bostock said 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. Yahoo is a world-class company with an extremely bright future, and collaborating together, I believe we can help the company achieve its ambitious goals," Bostock added. Yahoo Adds Carl Icahn To Board In Proxy Truce Yang said the agreement ended the distraction caused by the ongoing proxy battle. "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," Yang said Monday. "I look forward to working together with our new colleagues on the Board to make that happen," Yang added. In June Yahoo announced that it had signed a long-term search advertising agreement with Google, which is still awaiting antitrust approval from regulators at the United States Department of Justice. Yahoo has held talks with Time Warner relating to a possible sale of its AOL business, and Microsoft has held separate talks surrounding its own purchase of AOL. Yahoo was expected to file details of the settlement agreement with the Securities and Exchange Commission late Monday. Related Links:
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9:58 pm on July 21, 2008 (utc 0)