Dear Yahoo, You guys stink. Love, Carl

Icahn accuses brass of failing investors

The proxy battle for Yahoo got more hostile Monday when Carl Icahn fired off a letter accusing management of misleading employees and failing its investors.

Icahn's letter to Roy Bostock takes the Yahoo chairman to task for making "approximately $10,000 per week last year -- not bad for a board member. I believe most of your shareholders would be interested in seeing your time sheets."

Icahn seeks to replace the Yahoo board with his own slate that includes himself and such media moguls as Frank Biondi, Mark Cuban and Robert Shaye, but Yahoo on Monday advised shareholders against such drastic measures.

"Icahn has no credible plan except to sell the company to Microsoft -- despite the fact that Microsoft has publicly indicated that it has no current interest in such a transaction," Bostock and CEO Jerry Yang wrote in a letter to shareholders.

The pair called Yahoo's Aug. 1 annual meeting, where votes for directors will be cast, "the most important for stockholders in our history."

Bostock and Yang argue that a $40 billion worldwide online advertising industry will grow to $75 billion in 2010 and that Yahoo is well-positioned to capture a significant chunk of that growth, so much so that Microsoft's now-rescinded bid of $33 per share was woefully inadequate.

Yahoo shares closed Monday at $26.58.

But Icahn says Yahoo has blown it by permitting Google to leave it "in the dust."

He questions whether Bostock has even been reading his correspondence and asks why Yahoo refuses to get rid of an expensive "poison pill" severance plan that its own compensation adviser called "nuts."

And he insinuates that Yahoo neglected to tell its employees about Microsoft's earmarking $1.5 billion in employee retention benefits had it been allowed to acquire Yahoo.

"Is it not better to incentivize employees to stay in their jobs than to quit?" he asks.

Icahn's history as a corporate agitator includes dealings with Time Warner, where he's a 3.3% stakeholder; Blockbuster, where he's a board member; and Marvel, where he tried unsuccessfully to wrest control of the company from Avi Arad and Ron Perelman more than a decade ago.
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