Yahoo!'s Upside: Only Angry Shareholders

Shareholders may also call Yahoo! to task on disappointing second quarter results from last week, in which profit tumbled 18.6% vs. a year ago.

"The focus this year for a lot of shareholders will be what's going to happen now with the settlement and the expansion of the board -- where is the company going?" says Warren Chen, a managing director at Glass Lewis, a proxy advisory firm.

Glass Lewis is recommending that shareholders withhold votes for three of the board's current members: Bostock, Ronald Burkle and Arthur Kern, all of whom received the most "withhold" votes at last year's shareholder meeting. The firm noted that each of the men sat on Yahoo!'s compensation committee last year, "during which time the company paid more compensation to its top executives but performed worse than its peers."

Activist shareholder Eric Jackson also is calling for withhold votes for the same three members, as well as Eric Hippeau, because he, like Kern, has served on the board for over 12 years, which Jackson said is too long given Yahoo!'s poor performance these last four years.

Indeed, Yahoo!'s yearly revenue grew 22% from 2005 to 2006, but only grew 8.5% from 2006 to 2007. Meanwhile, the company's shares have slid 15% from a year ago, and 27% from two years ago.

Yahoo's second-largest shareholder, Capital Research Global Investors, which owns a 6.5% stake, is rumored to be considering withholding votes for Bostock and Yang. A spokesman for the company declined to comment.