Confidential, For Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
þ
Definitive Proxy Statement
o
Definitive Additional Materials
o
Soliciting Material under Rule 14a-12
Yahoo! Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (Check the appropriate box):
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by registration statement number, or the form or schedule and the
date of its filing.
On July 21, 2008, Yahoo! Inc. (the “Company”) and Icahn Partners LP, Icahn Partners Master Fund LP,
Icahn Partners Master Fund II L.P., Icahn Partners Master Fund III L.P., High River Limited
Partnership and Carl C. Icahn (collectively, the “Icahn Group”) entered into an agreement (the
“Settlement Agreement”) to settle the proxy contest pertaining to the election of directors to the
Company’s Board of Directors (the “Board”) at the Company’s 2008 annual meeting of stockholders
(the “Annual Meeting”), which will be held on August 1, 2008.
Under the Settlement Agreement, which is described in the accompanying supplement (the
“Supplement”) to the Company’s proxy statement dated June 9, 2008, the Icahn Group have irrevocably
withdrawn their notice of intention to nominate certain individuals for election as directors at
the Annual Meeting, agreed to immediately cease all efforts related to their own proxy solicitation
and agreed to vote, or cause to be voted, all shares of the Company’s common stock beneficially
owned by them for all of the directors nominated by the Board. Additionally, the Company has
agreed that, following the Annual Meeting, the number of seats on the Board will be increased to
11, Carl Icahn will be appointed to serve as a director of the Company until the Company’s 2009
annual meeting of stockholders (the “2009 Annual Meeting”), and the Board will appoint two more
individuals to serve as directors of the Company until the 2009 Annual Meeting. These two
additional individuals will be selected at the Board’s sole discretion, upon the recommendation of
the Board’s Nominating and Corporate Governance Committee, from the following list: Lucian A.
Bebchuk, Frank J. Biondi, Jr., John H. Chapple, Mark Cuban, Adam Dell, Keith Meister, Edward H.
Meyer, and Brian S. Posner, each of whom was on the Icahn Group’s slate of director nominees, and
Jonathan Miller. In connection with the settlement of the proxy contest, Robert A. Kotick has
submitted his resignation from the Board, which will become effective upon the completion of the
Annual Meeting.
The Board’s nominees for election as directors at the Annual Meeting are: Roy J. Bostock, Ronald
W. Burkle, Eric Hippeau, Vyomesh Joshi, Arthur H. Kern, Robert A. Kotick, Mary Agnes Wilderotter,
Gary L. Wilson and Jerry Yang. The Board of Directors urges you to elect the nine nominees
recommended by the Board by voting on the enclosed WHITE proxy card.
Please note that, pursuant to the Settlement Agreement, any GOLD proxy card which you may have
previously submitted will NOT be voted at the Annual Meeting. Accordingly if you previously
submitted a GOLD proxy card, it is very important that you sign, date, and return the enclosed
WHITE proxy card or submit your proxy by internet or telephone.
Please review the Supplement, regardless whether you voted on a card previously supplied by the
Company.
If you
have questions about voting your shares, please call MacKenzie
Partners, Inc. toll-free at
(800) 322-2885.
ANNUAL MEETING OF STOCKHOLDERS
to be held on August 1, 2008
at
The Fairmont San Jose
170 South Market Street
San Jose, California
This supplement (the “Supplement”) supplements and amends the proxy statement dated June 9,2008 (the “Proxy Statement”) of Yahoo! Inc. (the “Company”) furnished to holders of the Company’s
common stock (the “Common Stock”) in connection with the solicitation of proxies on behalf of the
Board of Directors of the Company (the “Board of Directors” or the “Board”) for use at the Annual
Meeting of Stockholders (the “Annual Meeting”) to be held on August 1, 2008, or any adjournment or
postponement thereof. The Annual Meeting will be held at The Fairmont San Jose, 170 South Market
Street, San Jose, California, at 10:00 a.m., local time. The record date for the determination of
the holders of Common Stock who are entitled to notice of and to vote at the Annual Meeting is June3, 2008, which is the same record date specified in the Proxy Statement. This Supplement, which
should be read in conjunction with the Proxy Statement, is first being mailed to stockholders on or
about July 28, 2008.
On July 21, 2008, the Company and Icahn Partners LP, Icahn Partners Master Fund LP, Icahn
Partners Master Fund II L.P., Icahn Partners Master Fund III L.P., High River Limited Partnership
and Carl C. Icahn (collectively, the “Icahn Group”), entered into an agreement (the “Settlement
Agreement”) to settle the proxy contest pertaining to the election of directors to the Board at the
Annual Meeting.
Under the Settlement Agreement, the Icahn Group have irrevocably withdrawn their notice of
intention to nominate certain individuals for election as directors at the Annual Meeting, agreed
to immediately cease all efforts related to their own proxy solicitation and agreed to vote, or
cause to be voted, all shares of Common Stock beneficially owned by them for all of the directors
nominated by the Board. For additional information regarding the Settlement Agreement refer to the
section below captioned “Background.”
The Board’s nominees for election as directors at the Annual Meeting are: Roy J. Bostock,
Ronald W. Burkle, Eric Hippeau, Vyomesh Joshi, Arthur H. Kern, Robert A. Kotick, Mary Agnes
Wilderotter, Gary L. Wilson and Jerry Yang. The Board of Directors urges you to elect the nine
nominees recommended by the Board by voting on the enclosed WHITE proxy card.
In addition, stockholders are being asked to vote at the Annual Meeting “FOR” the ratification
of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting
firm (Proposal No. 2) and “AGAINST” each of the three proposals submitted by stockholders (Proposal
Nos. 3 through 5), as more fully described in the Proxy Statement.
If you submitted or submit a WHITE proxy card, and do not revoke your proxy before it is voted
at the Annual Meeting, your shares will be voted as indicated on that proxy card.
Please note that, pursuant to the Settlement Agreement, any GOLD proxy card which you may have
previously submitted will NOT be voted at the Annual Meeting. Accordingly if you previously
submitted a GOLD proxy card, it is very important that you sign, date, and return the enclosed
WHITE proxy card or submit your proxy by internet or telephone.
In all matters other than the election of directors, abstentions have the same effect as votes
“AGAINST” a matter. A broker is entitled to vote shares held for a beneficial owner on routine
matters, such as the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s
independent registered public accounting firm, without instructions from the beneficial owner of
those shares. On the other hand, a broker may not be entitled to vote shares held for a beneficial
owner on certain non-routine items, such as contested director elections and each of the
stockholder proposals, absent instructions from the beneficial owners of such shares. Thus, if you
do not give your broker specific instructions, your shares may be treated as “broker non-votes” and
may not be voted on these matters and, in such event, your shares will not be counted in
determining the number of shares necessary for approval, although they will count for purposes of
determining whether a quorum exists.
Stockholders are urged to vote promptly using the enclosed WHITE proxy card. You may change
your vote or revoke your proxy at any time before your proxy is voted at the Annual Meeting. If you
are a stockholder of record, you may change your vote or revoke your proxy by: (1) delivering to
Yahoo! (Attention: Corporate Secretary) at the address on the first page of this Supplement a
written notice of revocation of your proxy; (2) delivering to Yahoo! an authorized proxy bearing a
later date (including a proxy by telephone or over the Internet); or (3) attending the Annual
Meeting and voting in person. Attendance at the meeting in and of itself, without voting in person
at the meeting, will not cause your previously granted proxy to be revoked. For shares you hold in
street name, you may change your vote by submitting new voting instructions to your broker, bank or
other nominee or, if you have obtained a legal proxy from your broker, bank or other nominee giving
you the right to vote your shares at the Annual Meeting, by attending the meeting and voting in
person.
For additional information regarding voting of your shares, refer to the section below
captioned “Voting of Proxies.”
Background
On May 15, 2008, the Icahn Group formally notified the Company of their intention to nominate
ten nominees for election at the Annual Meeting. On June 6, 2008, the Icahn Group further notified
the Company that Keith A. Meister voluntarily withdrew as a nominee from the Icahn Group slate of
directors and that the Icahn Group intended to nominate nine nominees for election at the Annual
Meeting. On June 9, 2008, the Icahn Group further notified the Company that
Robert K. Shaye voluntarily withdrew as a nominee for director of the Company and that Mr. Meister
would be reinstated as a director nominee.
On July 21, 2008, as stated above, the Company and the Icahn Group entered into the Settlement
Agreement. Pursuant to the Settlement Agreement, among other things:
•The Company has agreed that, as soon as practicable following the date of the Annual
Meeting:
• but no later one business day following the completion of the Annual Meeting,
the Board will (i) increase the number of seats on its Board to 11, (ii) obtain the
resignation from the Board of Robert Kotick and (iii) take all necessary action to
appoint Carl Icahn (the “Icahn Associates Nominee”) to serve as a director of the Company until no
earlier than the Company’s 2009 annual meeting of stockholders (the “2009 Annual
Meeting”), subject to the terms of the Settlement Agreement; and
• but no later than the later of August 15, 2008 and one business day following
completion of the Annual Meeting, the Board will appoint two individuals to serve as
directors of the Company until no earlier than the 2009 Annual Meeting, subject to
the terms of the Settlement Agreement, which individuals will be selected at the
Board’s sole discretion, upon the recommendation of the Company’s Nominating and
Corporate Governance Committee, from the following list: Lucian A. Bebchuk, Frank J.
Biondi, Jr., John H. Chapple, Mark Cuban, Adam Dell, Keith Meister, Edward H. Meyer,
and Brian S. Posner, each of whom was on the Icahn Group’s slate of director
nominees, and Jonathan Miller.
• The Icahn Group have irrevocably withdrawn their notice to the Company of their intention to
nominate certain individuals at the Annual Meeting and have agreed to immediately cease all efforts
related to their own proxy solicitation.
• Each member of the Icahn Group will cause or instruct the record owner to cause all shares
of the Company’s common stock beneficially owned by them to be present and voted for all of the
directors nominated by the Board for election at the Annual Meeting.
• In the event the Icahn Group and their affiliates own less than 30 million shares of the
Company’s common stock, the Icahn Associates Nominee will tender his resignation from the Board.
• So long as the Icahn Associates Nominee is a member of the Board, no member of the Icahn
Group nor any affiliate of the Icahn Group will:
• solicit proxies or written consents of stockholders, or any other person with
the right to vote or power to give or withhold consent in respect of the voting
securities of the Company, or conduct, encourage, participate or engage in any
“solicitation” of any proxy, consent or other authority to vote any voting
securities, with respect to any matter, or become a participant in any contested
solicitation with
respect to the Company, including without limitation relating to the removal or the
election of directors;
• form or join in a partnership, limited partnership, syndicate or other group,
including without limitation a group as defined under Section 13(d) of the Securities
Exchange Act of 1934, with respect to the Company’s common stock;
• without the prior approval of the Board contained in a written resolution of
the Board, take certain actions with respect to any (i) tender offer or exchange
offer, merger, acquisition or other business combination involving the Company or any
of its subsidiaries or affiliates; (ii) any form of business combination or
acquisition or other transaction relating to a material amount of assets or
securities of the Company or any of its subsidiaries or affiliates; or (iii) any form
of restructuring, recapitalization or similar transaction with respect to the Company
or any of its subsidiaries or affiliates; and
• make, or cause to be made, any statement or announcement that relates to and
constitutes an ad hominem attack on, or relates to and otherwise disparages, the
Company, its officers or its directors or any person who has served as an officer or
director of the Company on or following the date of the Settlement Agreement.
• If, prior to the 2009 Annual Meeting, the Board forms a committee to evaluate, negotiate or
approve an extraordinary transaction, involving a possible change in control of the Company, the
sale of all or substantially all or a material portion of the assets of the Company or a sale of
all or substantially all of the Company’s search assets, or any other material transaction out of
the ordinary course of business, the Board will offer to appoint the Icahn Associates Nominee to
serve on any such committee.
• The Icahn Group and the Company agreed to a mutual release of claims arising in respect of,
or in connection with, the nomination and election of directors at the Annual Meeting.
The Company filed a complete copy of the Settlement Agreement with the Securities and Exchange
Commission on July 21, 2008 as Exhibit 10.1 to its Current Report on Form 8-K. The foregoing
description of the Settlement Agreement is qualified in its entirety by reference to the full text
of the Settlement Agreement.
Nominees
All nine members of the Current Board are standing for re-election at the Annual Meeting: Roy
Bostock, Ronald Burkle, Eric Hippeau, Vyomesh Joshi, Arthur Kern, Robert Kotick, Mary Agnes
Wilderotter, Gary Wilson and Jerry Yang. Subsequent to the Company’s July 21, 2008press release
announcing the Settlement Agreement, following discussions with, and
at the request of, the Company, Mr. Kotick confirmed that in order to ensure that the Settlement Agreement is properly implemented in
accordance with its terms (which provide for Mr. Kotick to resign as a director as soon as
practicable following the completion of the Annual Meeting), he will stand for re-election at the
Annual Meeting and his resignation will become effective upon the completion of the Annual Meeting.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” ALL OF THE BOARD’S NOMINEES.
Voting of Proxies
If you wish to vote for the nine nominees listed above, you may do so by voting on the WHITE
proxy card enclosed with this Supplement. If you vote, or if you previously voted, on the WHITE
proxy card previously furnished to you with the Proxy Statement, your shares will be voted in
accordance with your instructions, or in the absence of any such instructions, for the nine
nominees named above. No further action is required if you have already voted on a WHITE proxy
card previously supplied by the Company.
Shares of Common Stock represented by properly executed proxy cards received by the Company
(either electronically via the internet, by phone, or via mail) in time for the Annual Meeting will
be voted in accordance with the choices specified in the proxies. If you are a stockholder of
record, and you sign and return a WHITE proxy card without giving specific voting instructions,
your shares will be voted as recommended by our Board of Directors on all matters listed in the
notice for the meeting, and as the proxyholders may determine in their discretion with respect to
any other matters properly presented for a vote before the meeting. If you hold your shares in
street name and do not provide your broker with voting instructions (including by returning a blank
WHITE voting instruction card), your shares may be treated as “broker non-votes” and may not be
counted in connection with certain matters (as described above).
If you submitted or submit a WHITE proxy card, and do not revoke your proxy before it is voted
at the Annual Meeting, your shares will be voted as indicated on that proxy card.
Please note that any GOLD proxy card which you may have previously submitted will not be voted
at the Annual Meeting. Accordingly if you previously submitted a GOLD proxy card, it is very
important that you sign, date, and return the enclosed WHITE proxy card or submit your proxy by
internet or telephone. Proxies granted by the GOLD proxy card included with the Icahn Group’s proxy
statement will not be included in determining whether or not a quorum is present and will not be
counted in tabulating the number of votes cast on the election of directors, the ratification of
the Company’s appointment of an independent registered public accounting firm or the vote on the
three stockholder proposals. In that case, your vote on the GOLD
proxy card included with the Icahn
Group’s proxy statement will have no effect on the outcome of the voting. In addition, votes that
you may have previously authorized to be cast on your behalf by the Icahn Group by telephone or the
internet will not be cast. You may vote again by telephone or the internet by following the
instructions in the accompanying WHITE proxy card.
For shares you hold in street name, you may change your vote by submitting new voting
instructions to your broker, bank or other nominee or, if you have obtained a legal proxy from your
broker, bank or other nominee giving you the right to vote your shares at the Annual Meeting, by
attending the meeting and voting in person.
The Board of Directors has not received valid notice of any other business that will be acted
upon at the Annual Meeting. If any other business is properly brought before the Annual
Meeting, proxies in the enclosed form will be voted in respect thereof as the proxyholders deem
advisable.
Litigation
As more fully described in the Proxy Statement, since February 11, 2008, five separate
stockholder lawsuits were filed in Delaware Court of Chancery against members of the Board of
Directors (the “Delaware Lawsuits”). Two of the Delaware Lawsuits were voluntarily dismissed and
the remaining Delaware Lawsuits have been consolidated. On June 13, 2008, defendants filed a
motion to dismiss the operative complaint. On June 16, 2008, the Court denied plaintiffs’ renewed
request for an expedited trial date and on July 11, 2008, stayed all discovery pending resolution
of defendants’ motion to dismiss. In lieu of opposing the motion to dismiss, on July 14, 2008,
plaintiffs filed a motion for leave to file an amended complaint (the “Second Amended and
Consolidated Complaint”).
The proposed Second Amended and Consolidated Complaint purports to allege claims against
certain former and current members of the Board of Directors on behalf of all the Company’s
stockholders, except defendants and their affiliates, and derivatively on behalf of the Company.
The Company is named as a nominal defendant only, and no monetary relief is sought against the
Company.
The proposed Second Amended and Consolidated Complaint generally alleges that defendants
breached fiduciary duties in connection with consideration of proposals by Microsoft Corporation
(“Microsoft”) to purchase all or part of the Company, adoption of employee retention plans, the
June 12, 2008 agreement between Google, Inc. and the Company, and purports to allege claims relating
to alleged false and misleading statements in the Proxy Statement. With regard to the Proxy
Statement, plaintiffs allege that the Proxy Statement falsely discloses that the severance plans
were designed to help retain the Company’s employees, maintain a stable work environment and
provide certain economic benefits to the employees in the event their employment is actually or
constructively terminated in connection with a change in control of the Company when, according to
plaintiffs, the severance plans allegedly (i) were designed to interfere with Microsoft’s desire
for an orderly integration and to defend against a potential proxy contest, (ii) provide no
economic benefit to employees in the event of any reduction in force, reorganization or alternative
transaction in lieu of a sale to Microsoft, and (iii) are drafted in a manner that may potentially
trigger a tax liability for employees who resign and receive severance. Plaintiffs also allege
that the Proxy Statement is misleading in stating that Compensia advised the Company and F.W. Cook
& Co. advised the Compensation Committee with respect to the
terms of the plans and that the Proxy
Statement omits to state that the Company’s management disregarded and withheld from the Board
advice and information provided by Compensia regarding (i) the
provisions of the severance plans that
allow an employee to obtain severance benefits by claiming a change in the employee’s duties or
responsibilities following a change in control, (ii) the amount of severance benefits to be paid to
senior executives of the Company following a change in control, and (iii) the potential total cost
of the severance plans. Plaintiffs also allege that the Proxy Statement omits to state that
neither Compensia nor F.W. Cook & Co. attended any relevant
meeting of the Board or the Compensation
Committee. The proposed Second Amended and Consolidated Complaint seeks unspecified compensatory
damages, declaratory and injunctive relief, as well as an award of plaintiffs’ attorneys’ fees and
costs.
The Company understands that the defendants intend to defend the Delaware Lawsuits vigorously.
Although no monetary relief is sought against the Company, the Company expects to incur
substantial costs in connection with the defense of the Delaware Lawsuits.
By Order of the Board of Directors
Michael J. Callahan Executive Vice President, General Counsel and Secretary
