I am a Yahoo! shareholder and have pulled together a group of other Yahoo! shareholders with 3.2 million shares owned collectively (worth $74 million at today's prices). I happen to agree with Icahn's arguments and support his slate; so do most retail investors and smaller institutional and hedge fund investors, according to unscientific conversations I've had over the last six weeks.
Yahoo!'s argument for why the current directors should keep their jobs is that Icahn's team has no plan to operate the company if he wins. It also appears he has little leverage to bring Microsoft back to the negotiating table. They point to Icahn's existing suggestions to simply offer to sell the company to Microsoft for $34.375, fire Jerry Yang as CEO and hire someone like Eric Schmidt as CEO. They and others have also criticized Icahn's slate as not having enough "Internet experience." They warn that Yahoo!'s newly approved "retention package" will kick in if Icahn wins five or more board seats in this proxy contest. Such an outcome would be classified as a change in control, meaning Icahn's new group couldn't change any employee's job description or location without potentially incurring up to a $2.6 billion fee (paid for by Yahoo! shareholders).
Reading between the lines, Yahoo!'s board is saying: We know our four-year track record is poor and we understand the shareholder anger over us not consummating a deal with Microsoft, but you should still vote for us because we can operate this company better than Icahn and at less cost to you shareholders.
Let me be clear that I reject this argument. I have been seeking major changes to Yahoo!'s board since January 2007. Many other shareholders have wanted changes to Yahoo!'s board for some time. At last year's annual meeting, 36% of Yahoo! shareholders voted against the re-election of the three directors on the Compensation Committee, as well as high protest votes against every other director, in part due to mass frustration with the underperformance of this company.