Activist Investor Seeks To Replace Yahoo’s Entire Board

Starboard Value LP nominated an entirely new board at Yahoo on Thursday, setting up a battle between the activist investor and the faded Internet company.

Starboard, which owns about 1.7 percent of outstanding shares, sent a letter to Yahoo investors that said that company leaders have failed to deliver results. The hedge fund says significant change is needed "to hold management accountable and properly oversee any operational turnaround plan, separation or sale of assets."

Yahoo CEO Marissa Mayer sits on the board and has said that she wants to continue leading the company. It is not clear what the attempted coup means for her.

"The management team and Board of Yahoo have repeatedly failed shareholders," Starboard wrote in its letter to shareholders. "Time and again, operating results have been decidedly negative and materially worse than management's guidance and external expectations."

Yet Starboard may simply be applying pressure with the hope that it can assert its influence immediately.

Starboard said in its letter that it hopes that it can reach a "mutually agreeable resolution with Yahoo that would allow us to get involved sooner to ensure a good outcome."

Yahoo did not immediately respond to a request for comment.

Starboard's board nominees include Eddy Hartenstein, former CEO of Tribune Co.; and Jeffrey Smith, CEO of Starboard and chairman of Darden Restaurants Inc.

Tension between Starboard and Yahoo has been escalating. Yahoo named two new directors earlier this month, a maneuver that likely agitated Starboard. Starboard has suggested a major change in leadership is needed, and that could include Mayer, who has cut staff and jettisoned assets in a bid to turn Yahoo around. Mayer has been CEO since July 2012.

Yahoo has been trying to reverse a prolonged decline in its revenue and figure out a way to avoid paying taxes on the gains from a roughly $28 billion stake...

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