Icahn Targets Yahoo! Board of Directors

Updated from 3:44 p.m. EDT

Carl Icahn is treading over familiar ground, formally launching a proxy fight in a move to replace 10 seats on Yahoo!'s (YHOO - Cramer's Take - Stockpickr) board of directors.

In a letter to Yahoo!'s Chairman Roy Bostock Thursday, Icahn said the Internet search giant "acted irrationally" and has lost the faith of shareholders and Microsoft (MSFT - Cramer's Take - Stockpickr), which tried to acquire the company at a price of $33 a share, an offer that Yahoo!'s management said was too low.

Icahn said that many investors have expressed dissatisfaction with Yahoo! for failing to reach a merger agreement with Microsoft, pushing him to lead a proxy battle against the company's board. Microsoft has given no indication that it would be interested in reviving talks with Yahoo!, as many shareholders have been hoping. Still, a vote to oust the Internet giant's current board could at least get the conversation going again.

"It is quite obvious that Microsoft's bid of $33 per share is a superior alternative to Yahoo's prospects on a standalone basis," Icahn wrote to Bostock. "I am perplexed by the board's actions. It is irresponsible to hide behind management's more than overly optimistic financial forecasts. It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72% premium over Yahoo's closing price of $19.18 on the day before the initial Microsoft offer."

Icahn managed to barely squeak by Yahoo!'s deadline to nominate candidates for the board. Yahoo! set the date for the end of the day on Thursday, a tight turnaround for anyone trying to push through his or her own slate. All eyes will now turn to Yahoo!'s annual shareholder meeting, set for July 3.