News 

Eric Jackson, founder of the activist hedge fund Ironfire Capital and leader of the grassroots shareholder group 'Yahoo Plan B', says he will encourage his loose-knit group to elect five Yahoo directors and four Icahn nominees.

"It's become clear over the last two weeks that many shareholders are reluctant to support the entire list of Icahn nominees," Jackson claims.

The 'Plan B' group is made up of 150 Yahoo stockholders representing 3.2 million shares. Members of the web-based activist group of small shareholders vote individually rather than as a group, Jackson claims.

Separately, a source familiar with the thinking of Yahoo's board of directors claims they see no need to compromise with Icahn and accept some of his rival slate as a way of defusing the proxy battle.

The moves come in the busy final days before an 1 August showdown for control of Yahoo. Several proxy advisory firms are expected to weigh in with recommendations to investors on whether to support the Yahoo or Icahn camps.

Meanwhile, Yahoo is expected by many Wall Street analysts to report weak quarterly results on Tuesday in the face of slackening demand from key corporate advertisers.

Yahoo's position was bolstered on Friday when fund manager Bill Miller, chief investment officer of Legg Mason, said he would support Yahoo's existing board at the 1 August annual shareholder meeting in Silicon Valley. Legg Mason recently held about 60.7 million Yahoo

ADVERTISEMENT

shares, about 4.4% of those outstanding.

That was a blow to billionaire investor Carl Icahn's two-month campaign to replace the embattled internet media company's board of directors and then reopen negotiations on a full or partial merger with Microsoft.

Hybrid plan

Jackson is calling on Plan B members to vote for five current Yahoo directors, including current chief executive Jerry Yang, Hewlett-Packard printing executive Vyomesh Joshi, Activistion CEO Robert Kotick, former Microsoft manager Maggie Wilderotter and former Northwest Airlines Chairman Gary Wilson.

He's also encouraging shareholders to support four Icahn nominees, including Adam Dell, a venture capital investor and investor in start-up HotJobs which was sold to Yahoo, two advertising executives, Edward Meyer and John Chapple, along with Harvard professor and outspoken executive pay critic Lucian Bebchuk.

"We are confident this new hybrid Yahoo board can effectively conclude a deal with them (Microsoft)," Jackson says.

A year ago, Yang took over from former CEO Terry Semel, but Jackson now believes Yang, too, should step aside: "Yahoo would be better served with a different CEO, but I think he should stay on the board," the activist investor says.

Jackson says his recommendation of the five existing Yahoo directors should not be interpreted as satisfaction with the current board, which he blames for allowing a host of corporate governance missteps to occur over the past four years.

Rather, he argues the partial board is needed to ensure continuity even as he advocates that it seeks a merger with Microsoft.

At Yahoo's 2007 shareholder meeting, Jackson and his Plan B group called on other shareholders to withhold their vote for certain Yahoo board members in a protest over executive pay.

Roughly one-third of shareholders voted against the three members of Yahoo's compensation committee in protest over the company's poor performance in recent years and failure to link executive pay to performance.