Yahoo reaches Icahn settlement

Seat on board persuades Icahn to drop proxy fight

Yahoo's management team has seen off a potential proxy fight by agreeing to add activist shareholder Carl Icahn to join the board.

The announcement came just days after one of Yahoo's largest institutional investors, Legg Mason, said it would back the existing board in the forthcoming proxy fight.

Icahn will now join Yahoo's management board, replacing Robert Kotick, who has decided not to stand for re-election at the forthcoming shareholders' meeting.

“We are gratified to have reached this agreement, which serves the best interests of all Yahoo stockholders,” said Roy Bostock Yahoo Chairman, in a statement.

Icahn had originally intended to capitalise on shareholder concern that Yahoo's current board had failed to strike a deal with Microsoft over selling all or part of its business to the software titan.

" I am happy that the board has agreed in the settlement agreement that any meaningful transaction, including the strategy in dealing with that transaction, will be fully discussed with the entire board before any final decision is made, " said Icahn, in a statement.

Yahoo will also add two further board members. These will be chosen from a list of eight candidates originally proposed by Icahn as an alternative management team and Jonathan Miller, currently a partner in venture capitalists, Velocity Interactive Group and a former chairman and chief executive of AOL.