Yahoo has reached a settlement with activist investor Carl Icahn, who will join the Internet company's board.
Icahn, who had proposed his own slate of board members, was agitating for the company to reach a deal to sell all or part of the company to Microsoft. Icahn and Microsoft officials had previously stated that they could not work with the existing Yahoo board.
As part of the settlement, Icahn, who owns about 68.7 million shares, or 4.98 percent of Yahoo common stock, has agreed to withdraw his nominees for consideration at the annual meeting and to vote his Yahoo shares in support of the board's nominees. Board member Robert Kotick will not seek re-election.
Eight members of Yahoo's current board of directors will stand for re-election at the scheduled shareholder meeting next month: Roy Bostock, Ronald Burkle, Eric Hippeau, Vyomesh Joshi, Arthur Kern, Mary Agnes Wilderotter, Gary Wilson, and Jerry Yang.
The board will expand to 11 members, adding Icahn and two other nominees from Icahn's slate.
It was not immediately clear whether the board would continue negotiations with Microsoft.
"While I continue to believe that the sale of the whole company or the sale of its search business in the right transaction must be given full consideration, I share the view that Yahoo's valuable collection of assets positions it well to continue expanding its online leadership and enhancing returns to stockholders," Icahn said in a release. "I believe this is a good outcome and that we will have a strong working relationship, going forward. Additionally, I am happy that the board has agreed in the settlement agreement that any meaningful transaction, including the strategy in dealing with that transaction, will be fully discussed with the entire board before any final decision is made."