Activist Investor: Take Yahoo! Option No. 3

However, I recognize that there are some large institutional shareholders who will be persuaded by Yahoo!'s argument over Icahn's argument.

More importantly, I fear that a majority will side with Yahoo!, just as a majority of large holders sided with Motorola (MOT) management in May 2007 instead of Icahn, before the gravity of the company's problems fully showed themselves.

Therefore, this article is directed to those large holders in Yahoo! like Capital World Investors, Capital Research, Legg Mason (LM), Vanguard, State Street (STT), Citi Investment Research, Fidelity, BNY Mellon and T. Rowe Price (TROW). It is also directed to the large proxy advisory firms RiskMetrics, Glass Lewis and ProxyGovernance.

A "Third Option"

Here is a "Third Option" for how institutions can vote at Yahoo!'s annual meeting, if you cannot fully support the Icahn slate: Vote in a minority of Icahn's representatives to Yahoo!'s board.

There are 9 spots up for election on this year's Yahoo! board. My "Third Option" would be to vote in 5 from the existing board and 4 nominees from Icahn's slate. Whichever 9 individuals gets the most number of votes will serve on the new board.

In doing so, you will ensure the following:

• Change: After the company's last four years of poor performance and the great disappointment with the outcome of the Microsoft talks, shareholders clearly want change. This "Third Option" will create a new board. The old directors who remain will be more responsive and shareholder-friendly, as a result of a clear message being sent from this election.
• Heightened Accountability to the Will of Shareholders: There will be full accountability within board meetings by ensuring that shareholders select four powerful new voices to sit around the table representing their interests.
• Removal of Impediments to a Future Acquisition: The costly $2.6 billion severance/poison-pill plan will not be triggered through a "change of control" provision and could be immediately rescinded by the new board after the election, so as not to deter future potential acquirers of Yahoo!.
• Operational Continuity: The operational continuity of the company will be assured. You will continue to have the existing management team in place (until the new board makes changes in the future as needed), as well as a majority of the current board to ensure a continuity of the issues that have been discussed and grappled with at the board level over the last year.

Neither side running for election can guarantee that Microsoft will ever come back to the table with an offer for Yahoo!. We must accept that reality and select a board to do the best job in the current situation (even as distasteful as the situation is). This "Third Option" will clearly assure the best possible future outcome for shareholders vs. supporting only the incumbent Yahoo! board.

Which Yahoo! Directors Should Be Re-elected?

I endorse these five Yahoo! directors to remain on the board under this "Third Option" scenario, for reasons explained below:

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