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Sometimes dissident shareholders threaten proxy fights to get a company to increase its dividend or start a share buyback. Only occasionally do these shareholders seek a de facto takeover of the company.  Third Point, a hedge fund, has nominated its own slate of members for the Yahoo! (NASDAQ: YHOO) board ahead of the firm’s proxy filing.

To kick off the battle, Third Point wrote new Yahoo! CEO Scott that

A month has passed since Third Point announced its intention to nominate four directors – Harry Wilson, Michael Wolf, Jeff Zucker, and Daniel Loeb (the “Shareholder Slate”) – at the upcoming Annual Shareholder Meeting.  We “pre-announced” our slate in the hope that Yahoo! would recognize our nominees as impressive, independent thinkers with directly relevant experience and who, collectively, would enrich the Board’s dialogue during this critical period.  When we spoke on February 17, I reiterated our interest in avoiding a drawn-out proxy contest, and working constructively with you and the remaining Board members to promptly recruit Silicon Valley leaders with strong engineering, product and technology credentials to join us on the Board (many of whom have expressed interest in joining once the looming proxy contest was completed).  The intended result:  ensure Yahoo! maintains its place as a premier internet company by forcefully addressing the immediate strategic and operational challenges it faces.  With such a reconstituted Board in place, a powerful strategic planning committee would promptly but thoughtfully map out a plan to take full advantage of the Company’s valuable assets and stop its painful decay.  Perhaps naively, I believed that you and the Company would recognize the value to this approach, and we could join forces immediately in this regard.

Now, Third Point has accused that Yahoo! board of “stonewalling, apparent insouciance and decision not to engage with us in a serious manner.” There will now be a race for votes among Yahoo! shareholders to see whether Third Point can indeed oust some of the Yahoo! board and replace them with their own nominees.

Proxy battles rarely work. Investors usually vote with the current board and management. But, Yahoo! has been crippled long enough financially and strategically, the Third Point has a more than even chance to succeed

Douglas A. McIntyre