Yahoo strikes deal with Icahn to end proxy battle

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Silicon Valley: On Monday Yahoo gave in to the pressure from corporate raider Carl Icahn ahead of the annual meeting and granted him three seats on the company's board, ending a proxy fight for the control of the online giant.

Yahoo said its board will be expanded to 11 members, one of whom will be Icahn, who will be able to recommend two other directors.

The settlement names eight members of the board of directors eligible for re-election. The line-up includes CEO and co-founder Jerry Yang and chairman Roy Bostock.

It does not include Robert Kotick, the ActivisionBlizzard (ATVID) CEO, who is stepping down from the board of the Sunnyvale, California-based company, as defined in the agreement with Icahn.

The settlement ahead of Yahoo's August 1 annual meeting ends a two-month-long proxy fight for control of the company by Icahn, who has been spearheading a shareholder rebellion aimed at replacing the company's entire board in retaliation for its rejection of Microsoft's USD 47.5 billion takeover bid in early May.

Icahn, who bought his shares earlier this year, advocates selling Yahoo! to competitor Microsoft.

But in a July 17 letter to shareholders, Yang and Bostock decried Icahn as a recent investor with "a strong incentive to strike any deal with Microsoft that enables him to recover his investment and get his money back quickly."

Icahn, who has made a name on Wall Street as a activist shareholder, owns nearly 69 million shares, or nearly five per cent, of Yahoo.

Meanwhile, Yang said he looked forward to working with the new board members to "help us take advantage of the large and growing opportunity ahead of us."