Dissident Yahoo investor Eric Jackson on Monday urged fellow shareholders to vote for a board comprising five existing directors and four nominees from billionaire investor Carl Icahn's slate.
Jackson, who leads a group of 146 investors holding 3.2 million Yahoo shares, said that while he supported Icahn fully, he recognized that major shareholders may not. So he proposed a "third option" to create a new board that is more responsive to shareholders' concerns.
Icahn, who owns more than 4 percent of Yahoo, launched a proxy battle in May to replace the Web pioneer's board in the wake of Microsoft's failed effort to acquire the company.
"Neither side running for election can guarantee that Microsoft will ever come back to the table with an offer for Yahoo," Jackson said in a statement. "We must accept that reality and select a board to do the best job in the current situation (even as distasteful as the situation is)."
He added: "I want Icahn to win outright, but I am putting forward this "Third Option" because I fear several large shareholders will worry about the operational abilities of Icahn and his team."
Jackson said his move was aimed at major Yahoo shareholders, including Capital Research, Legg Mason and Vanguard, as well as proxy advisory firms like RiskMetrics and Glass Lewis.
Yahoo last week signed a Web search advertising deal with Google after talks with Microsoft broke down. The news sent Yahoo shares plunging more than 17 percent.
Jackson became the star of Yahoo's 2007 annual meeting when he accused then-chairman and CEO Terry Semel of mismanaging the company and failing to do more to revive its falling stock price. He also spearheaded a campaign against board-nominated directors, resulting in a hefty minority vote against the re-election of Semel, who stepped down soon after.
In May, Jackson launched a "vote no" campaign, reaching out to Yahoo shareholders via the Internet to urge them to vote against Yahoo directors.