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Yahoo! Sets Annual Meeting for July 3

Pia Sarkar

SAN FRANCISCO -- Yahoo!'s(YHOO Quote - Cramer on YHOO - Stock Picks) shareholders may get a chance to retaliate against the company's board of directors at its annual meeting on July 3.

Microsoft(MSFT Quote - Cramer on MSFT - Stock Picks) withdrew its $33-a-share bid for Yahoo! on Saturday, sending shares for the Internet provider down 15% on Monday as investors grumbled over the botched merger. But on Tuesday, the stock was clawing back up, gaining as much as 6% in recent trading.

Some shareholders now see hope in a revived deal with Microsoft(MSFT Quote - Cramer on MSFT - Stock Picks) while others are holding out for a relationship with Google(GOOG Quote - Cramer on GOOG - Stock Picks) that would allow Yahoo! to outsource its online search ads as a way to bump up revenue.

Yahoo!, which had been stalling on a date for its annual meeting on the threat of Microsoft replacing its board of directors with a new slate that would favor a merger, now runs the risk of its own shareholders organizing a mutiny.

Shareholders have until May 15 to nominate a board of directors. In its announcement of the date for the annual meeting, the company did not disclose a site. Any effort to unseat the directors would be a costly endeavor, however, especially now that Yahoo!'s stock has regained some ground.

Activist shareholder Eric Jackson, who had been urging Yahoo! to accept a deal with Microsoft, is calling for shareholders to unseat the existing 10 members on the board, all of whom are up for election.

"I think it's a remote possibility that every director can be voted off this board," Jackson says. "But there is such anger about what's happened over the weekend, I think it's possible. If that were to happen, it would be a complete and utter embarrassment for each and every director."

He adds that even if key directors like Yahoo! co-founder and Chief Executive Jerry Yang and Chairman Roy Bostock get the boot, it would be enough to send a message to the company that it must find a way to reinvigorate the business, whether by holding new talks with Microsoft or finding an alternative, including a deal with Google or Time Warner's(TWX Quote - Cramer on TWX - Stock Picks) AOL division.

Yang and other company executives have been making their rounds with media outlets since Monday, trying to show that it was not Yahoo! who refused a deal with Microsoft but the other way around. Yahoo! had been holding out for a raised bid of $37 a share while Microsoft would go as high as $33 a share, which is still an improvement over its original bid of $31 a share.

Yang has said that Yahoo! would be open to talks with other companies, including Microsoft, but also emphasized a focus on its own growth plans.

Shares of Yahoo! were up 5.1%, or $1.25, to $25.62 in afternoon trading.