SCHEDULE 14A
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Yahoo! Inc.
(Name of Registrant as Specified In Its Charter)
Carl C. Icahn
Keith A. Meister
Lucian A. Bebchuk
Frank J. Biondi, Jr.
John H. Chapple
Mark Cuban
Adam Dell
Edward H. Meyer
Brian S. Posner
Robert K. Shaye
Icahn Partners LP
Icahn Partners Master Fund LP
Icahn Partners Master Fund II LP
Icahn Partners Master Fund III LP
High River Limited Partnership
Hopper Investments LLC
Barberry Corp.
Icahn Onshore LP
Icahn Offshore LP
Icahn Capital L.P.
IPH GP LLC
Icahn Enterprises Holdings L.P.
Icahn Enterprises G.P. Inc.
Beckton Corp.
Vincent J. Intrieri
David Schechter
Mayu Sris
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On June 4, 2008, Carl C. Icahn issued a press release relating to Yahoo! Inc.,
which is filed herewith as Exhibit 1.
SECURITY HOLDERS ARE ADVISED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER
DOCUMENTS RELATED TO THE SOLICITATION OF PROXIES BY CARL C. ICAHN AND HIS
AFFILIATES FROM THE STOCKHOLDERS OF YAHOO! INC. FOR USE AT ITS ANNUAL MEETING
WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION,
INCLUDING INFORMATION RELATING TO THE PARTICIPANTS IN SUCH PROXY SOLICITATION.
WHEN COMPLETED, A DEFINITIVE PROXY STATEMENT AND A FORM OF PROXY WILL BE MAILED
TO STOCKHOLDERS OF YAHOO! INC. AND WILL ALSO BE AVAILABLE AT NO CHARGE AT THE
SECURITIES AND EXCHANGE COMMISSION'S WEBSITE AT HTTP://WWW.SEC.GOV. INFORMATION
RELATING TO THE PARTICIPANTS IN THE PROXY SOLICITATION IS CONTAINED IN THE
PRELIMINARY PROXY STATEMEMT ON SCHEDULE 14A THAT WAS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION ON MAY 19, 2008.
EXHIBIT 1
Carl C. Icahn
ICAHN SENDS OPEN LETTER TO BOARD OF DIRECTORS OF YAHOO!
Contact: Susan Gordon: (212) 702-4309
NEW YORK, NY, JUNE 4, 2008. Carl Icahn today announced that the following letter
was delivered to the board of directors of Yahoo!
SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER DOCUMENTS
RELATED TO THE SOLICITATION OF PROXIES BY CARL C. ICAHN AND HIS AFFILIATES FROM
THE STOCKHOLDERS OF YAHOO! INC. FOR USE AT ITS ANNUAL MEETING, WHEN THEY BECOME
AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION, INCLUDING
INFORMATION RELATING TO THE PARTICIPANTS IN THE PROXY SOLICITATION. WHEN
COMPLETED, A DEFINITIVE PROXY STATEMENT AND A FORM OF PROXY WILL BE MAILED TO
STOCKHOLDERS OF YAHOO! INC. AND WILL ALSO BE AVAILABLE AT NO CHARGE AT THE
SECURITIES AND EXCHANGE COMMISSION'S WEBSITE AT HTTP://WWW.SEC.GOV. INFORMATION
RELATING TO THE PARTICIPANTS IN THE PROXY SOLICITATION IS CONTAINED IN THE
PRELIMINARY PROXY STATEMENT ON SCHEDULE 14A THAT WAS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION ON MAY 19, 2008.
Carl C. Icahn
ICAHN CAPITAL LP
767 Fifth Avenue, 47th Floor
New York, NY 10153
June 4, 2008
Roy Bostock
Chairman
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089
Dear Mr. Bostock:
I have long been cynical about the effectiveness of many of the boards and
CEOs in this country and as a result the inability of our companies to compete.
I have constantly complained about how far CEOs and boards will go in order to
retain their jobs, yet even I am amazed at the length Jerry Yang and the Yahoo
board have gone to in order to entrench their positions and keep shareholders
from deciding if they wished to sell to Microsoft.
According to details in a complaint that I became aware of yesterday
(details Yahoo fought to keep under seal), Jerry Yang and a majority of the
board went to inordinate lengths to sabotage a Microsoft bid. The complaint
states: "Viewing employee retention as Microsoft's Achilles heel, Yang
engineered an ingenious defense creating huge incentives for a massive employee
walkout in the aftermath of a change in control. The plan gives each of Yahoo's
14,000 full-time employees the right to quit his or her job and pocket generous
termination benefits at any time during the two years following a takeover, by
claiming a "substantive adverse alteration" in job duties or responsibilities."
The damage to Microsoft "is compounded by the fact that Yahoo's thousands of
engineers, known as "Technical Yahoos!," have detailed job responsibilities and
qualifications."
Most importantly, Microsoft might never be able to trust a CEO and board
who, while claiming to be negotiating in good faith, went behind their back and
adopted a "plan" which not only sabotages any Microsoft acquisition but went so
far as to completely disable its own ability to rescind the "plan" as long as
Microsoft's offer remains pending. Until now I naively believed that
self-destructive doomsday machines were fictional devices found only in James
Bond movies. I never believed that anyone would actually create and activate one
in real life. I guess I never knew about Yang and the Yahoo Board. In my
opinion, it will be extremely difficult for Microsoft or other companies to
trust, work with and negotiate with a company that would go to these lengths.
It is insulting to shareholders that Yahoo for the last month has told us
that they are quite willing to negotiate a sale of the company to Microsoft and
cannot understand why Microsoft has walked away. However, the board conveniently
neglected to inform shareholders about the magnitude of the plan it installed
which made it practically impossible for Microsoft to stay at the bargaining
table. Could this have been the problem?
Even more deceitful are Yahoo's actions toward its own employees, for whom
you claimed to have set up the "plan". Management neglected to mention to these
same employees that Microsoft in its proposals had earmarked $1.5 billion of
retention incentives (representing over $100,000 per employee) meant to allay
any employee concerns.
Ironically, according to the complaint, this is not the first time that
Yahoo has denied shareholders the opportunity of selling to Microsoft at a large
premium. According to the complaint, in January 2007 Microsoft offered to
purchase Yahoo at $40 per share but the company rejected that proposal. On
January 31, 2008, Steve Ballmer emailed a letter to Jerry Yang and Roy Bostock
making a new proposal of $31 per share. The letter recounts Microsoft's prior
efforts to acquire Yahoo and noted that Microsoft had given Yahoo time to
implement business strategies designed to turn the company around. These
strategies obviously didn't work. The letter went on to state: "Our proposal
represents a 62% premium above the closing price of Yahoo! common stock of
$19.18 on January 31, 2008." Yahoo not only turned down this proposal but
sabotaged it. An article in CNET News cited in the complaint sums it up by
stating, "Yahoo may indeed agree to Microsoft's [offer], but it will be over
Jerry Yang's dead body".
I and many of your shareholders believe that the only way to salvage Yahoo
in the long if not short run is to merge with Microsoft. However, because of HSR
considerations, to complete a merger of this magnitude will take a period of
time. Even if by some stretch of the imagination the Yahoo board finally
determines to do the rational thing and sell the company, I fear that, in light
of Yang and the board's recent actions in response to Microsoft's overtures, it
may be too late to convince Microsoft to trust Yang and the current board to run
the company during that period while Microsoft sits on the sidelines with $45
billion at risk. Therefore, the best chance to bring Microsoft and Yahoo
together is to replace Yang and the current Yahoo board with a board that will
negotiate in good faith with Microsoft and in whom Microsoft will have trust to
operate the company during the long period between signing and closing.
You stated in a press release yesterday that, "Yahoo's board of directors
including Jerry Yang has been crystal clear that it would consider any proposal
by Microsoft that was in the best interests of its shareholders." However this
is not crystal clear to me. You have allegedly turned down a $40 offer. You have
turned down and sabotaged a $33 offer. Instead, you appear willing to negotiate
an "alternative" deal that in my opinion will be worth less than $33 but will
entrench the board and Jerry Yang. I understand how these actions are in the
best interests of management and a board whose members each receive $40,000 per
month for several days work, but it is hard for me to understand how these
actions are in the "best interests of the shareholders."
However, despite your actions to date, there is still some possibility that
you can resuscitate a Microsoft offer for the company. The board can rescind the
"severance plan" that is the largest impediment to a Microsoft deal. You
currently can do this because Microsoft withdrew their bid 30 days ago. It is
time for you to stop misleading your shareholders with respect to Microsoft. It
has been reported today that when asked to talk about the Microsoft bid, Sue
Decker indicated that Microsoft made an offer which Yahoo's board didn't feel
was at an attractive enough price. However, one doesn't have to be a rocket
scientist to realize there is a simple method to possibly achieve a higher
price. Simply rescind the poison pill "severance plan", which would free up
approximately $2.4 billion and possibly even more which could be added to the
bid. It is also time to admit to your shareholders that the severance plan was
not done for your employees (who you conveniently neglected to inform that
Microsoft had earmarked $1.5 billion in retention incentives for), but rather
was done simply as an entrenchment device and to impede a Microsoft bid. If you
are not completely disingenuous in your protestations concerning doing "the
right thing" for shareholders, you should rescind the severance plan
expeditiously and determine if Microsoft is still willing to purchase our
company and thereby create a true competitor for Google. I can only hope that
you will finally do what is in the "best interests of the shareholders."
Sincerely yours,
CARL C. ICAHN