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As Yahoo files proxy, road show begins

Filing of definitive proxy statement enables the Internet company to begin its investor road show, the next step in its proxy battle with activist shareholder Carl Icahn.

Dawn Kawamoto Former Staff writer, CNET News
Dawn Kawamoto covered enterprise security and financial news relating to technology for CNET News.
Dawn Kawamoto
5 min read

Yahoo announced on Monday that it filed its definitive proxy statement, which now allows the Internet search pioneer to begin its road show with investors.

Yahoo, which is embroiled in a proxy fight with major shareholder Carl Icahn, is seeking to persuade its investors to re-elect its current board at the August 1 shareholder meeting.

Icahn, meanwhile, is seeking to get his dissident slate of directors elected and is using his group to pressure Yahoo and Microsoft to undergo a full buyout of the Internet search pioneer. Currently, the two parties are in talks for Microsoft to buy or partner with Yahoo for a portion of its search business.

Here is the letter, enclosed with Yahoo's proxy statement from Chairman Roy Bostock and CEO Jerry Yang:

Dear Fellow Stockholder:

The vote you will cast for directors at Yahoo!'s August 1, 2008, annual meeting is the most important for stockholders in our history.

We believe that the re-election of our current board is in the best interests of Yahoo's stockholders. Under the leadership of the current board and management team, we are executing on our strategy to create value that is gaining traction. In addition, in responding to Microsoft Corporation's proposal to acquire the company and exploring strategic alternatives, Yahoo's board has been focused on one central goal: how best to maximize stockholder value.

In this regard, you should know that we have, at all times, been open to a transaction with Microsoft, if it offers our stockholders full and certain value. We write to ask you to support our slate of highly qualified and capable directors standing for re-election.

You are probably aware that Carl Icahn proposes to replace our entire board of directors with his hand-picked slate. Mr. Icahn has no credible plan, except to sell the company to Microsoft--despite the fact that Microsoft has publicly indicated that it has no current interest in such a transaction. Given Microsoft's stated position of not wanting to acquire Yahoo, the election of Mr. Icahn's slate could result in substantial erosion of stockholder value.

We Urge You To Act Now To Protect Your Investment By Rejecting Mr. Icahn's Slate And By Voting For Our Board Today, By Telephone, Internet, Or By Signing, Dating, And Returning The Enclosed WHITE Proxy Card.

Last year, after making changes in management, our board oversaw an intensive review by the new management team, led by Jerry Yang, of Yahoo!s business and strategy. The result was a more focused strategy, a more streamlined company, and a significant acceleration of specific initiatives to capitalize on the fast-growing online-advertising market. As part of that strategy, we made a deliberate, disciplined decision to make investments that would generate greater long-term value for stockholders.

We started from a great place. Yahoo is clearly a one-of-a-kind asset. We're a leader in search, a pioneer in mobile advertising, and the clear leader in display advertising--where we see the greatest growth opportunity in online advertising.

With more than 500 million monthly users worldwide, many best-in-class technology platforms, and strategically unique Asian assets, we are well-positioned to capture growth in an online-advertising market that is projected to grow from approximately $40 billion in 2007 to approximately $75 billion in 2010.

The key is the knowledge and experience to execute with this unique asset. We believe that successfully executing on our strategy of being the "starting point" for the most consumers on the Internet and the "must buy" for advertisers will enable us to generate double-digit growth in operating cash flow and will lead to improved stockholder returns.

Our recent financial results, coupled with a number of strategic acquisitions and a string of significant product rollouts, demonstrate that we are executing on our strategy:

  • We're continuing to see benefits from last year's rollout of Panama, our new search monetization platform that is helping to close the monetization gap.
  • Our acquisitions of Right Media, BlueLithium, Zimbra, and Maven Networks have all helped advance our core strategies.
  • We are winning new business partners and expanding relationships with existing partners--WPP, Wal-Mart, CBS, and more than 770 newspapers now in our newspaper publisher consortium.
  • Soon, we will roll out our new advertising-management platform--AMP! from Yahoo--that will enable us to offer advertisers and publishers an extraordinarily simple, seamless way to market over the Internet, helping us further our goal of becoming the "must buy" for online advertising.

Our Board Is Committed To Maximizing Stockholder Value.
Our board carefully evaluated Microsoft's original offer, and determined that it substantially undervalued our company and was not in the best interests of our stockholders.

Over the ensuing months, we engaged in serious discussions with Microsoft, including numerous face-to-face meetings, some of which included one or more of our independent directors.

During this period, our board was fully engaged, meeting more than 20 times to review the status of the discussions with Microsoft and to consider other available alternatives to maximize stockholder value.

At all times, our board and management have made clear that they have been open to entering into any transaction, including a sale to Microsoft, if it valued the company fairly and offered our stockholders certainty that they would receive that value, an important consideration, given the likely lengthy regulatory review process before a deal would be approved.

Our board also explored, and continues to explore, a variety of other ways to maximize stockholder value.

Carl Icahn Has No Credible Plan To Create Value.
Mr. Icahn's only plan for Yahoo, if his slate is elected, is to hope that Microsoft--which withdrew its acquisition proposal more than a month ago and has since publicly reaffirmed that it is not now interested in a full acquisition--can be persuaded to come back to the table and agree to acquire our company. But this is not a strategy.

In our opinion, Mr. Icahn and his slate are not the right individuals to guide Yahoo as a standalone company.

Our current board has the independence, the experience, the knowledge, and the commitment to navigate the company through the rapidly changing Internet environment, execute on our initiatives to capitalize on the fast-growing online-advertising market, and to deliver value for Yahoo and its stockholders.

The future of Yahoo and the value of your investment are in your hands. We ask you to vote for your highly qualified and dedicated directors today....

Thank you for your support.

Roy Bostock
Chairman of the Board

Jerry Yang
Chief Executive Officer

Yahoo's shares were down a slight 0.30 percent, to $26.36 a share, in late-morning trading.