Activist Investor: Take Yahoo! Option No. 3

The timing was impeccable when I opened my mail Friday and found Yahoo!'s(YHOO Quote) proxy statement with a cover note that started: "The vote you will cast for directors at Yahoo!'s August 1, 2008 annual meeting is the most important for stockholders in our history." I couldn't agree more.

Carl Icahn is seeking to oust the entire Yahoo! board at that meeting. There's been a barrage of letters and counter-letters between Icahn and Yahoo! Chair Roy Bostock in the last few weeks, and Yahoo! shareholders have been faced with a binary choice for their vote at the upcoming election. I want to outline and advocate for a third option.

To this point, Icahn has made the case that the current board bungled the negotiations with Microsoft(MSFT Quote), leaving a breathtaking amount of shareholder value on the table. They also approved an employment retention and severance package in February that was effectively a poison-pill, as it could tack on $2.6 billion to the price any acquirer would pay to buy company. ...