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Dissident Yahoo investor lays more groundwork for proxy fight

Hedge fund Third Point, which owns almost 6 percent of Yahoo, complains the company has ignored its concerns and asks shareholders to vote for its outsider board candidates.

Third Point LLC, the hedge fund that owns 5.8 percent of Yahoo, is taking its case against the company's current strategy to the shareholders. Specifically, the fund is asking shareholders to vote in an alternate slate of directors in an attempt to oversee new CEO Scott Thompson as he struggles to turn the company around.

Yahoo snagged Thompson from eBay in January following last September's ouster of former CEO Carol Bartz. Co-founder Jerry Yang resigned shortly afterwards, while several board members announced that they would not seek re-election this year.

But those changes weren't enough to satisfy Third Point, which last month filed initial papers with the SEC announcing its intent to shake up the board.

Third Point is now laying the groundwork for a potential proxy fight through a new regulatory filing issued yesterday that directly urges shareholders to vote for its outsider board members. The fund's four nominees include its own CEO Daniel Loeb; Michael Wolf, former president and chief operating officer of MTV Networks; Jeff Zucker, former chief executive of NBC Universal; and Harry Wilson, chairman and CEO of corporate restructuring firm Maeva Advisors.

In its filing, Third Point detailed a series of "misjudgments and failures" on the part of Yahoo's board and management, most notably the failure to accept Microsoft's takeover offer in 2008 and the hiring of Carol Bartz as CEO. Past requests to Yahoo's board to consider Third Point's own nominees as directors went unanswered, according to the hedge fund.

Yahoo's recent choices for board directors aren't sitting well with Third Point either.

"We also believe that the board's appointment of the newly-appointed directors was not in the best interests of the company and its shareholders," Third Point said in its filing. "Installing the hand-picked choices of the current board does nothing to allay concerns that the company is poised to repeat the errors of its past."

Third Point added that "we believe it is imperative to introduce new outside nominees with financial and business backgrounds that can assist the board and the company's management as they seek to turn the company around." The hedge fund also said that its selections would "provide the fresh perspective and necessary experience to overhaul the company's challenged organizational and operating structure."

Whether Yahoo will concede to Third Point's demands, stick with its own board choices, or shoot for a combination of both is still up in the air. A Yahoo spokesperson sent the following statement to CNET:

As previously stated, in order to achieve the best possible outcome for all Yahoo shareholders, the board's nominating and corporate governance committee has reviewed a wide range of highly-qualified candidates. The committee has included Third Point's candidates in its thorough review process and will make its recommendations to the full board shortly.