Yahoo board battle may begin within the next week

A potentially nasty battle to reshape Yahoos board of directors will begin within the next week unless the troubled Internet company submits to the demands of a major shareholder.Third Point LLC, a hedge fund that owns a 5.8 percent stake in Yahoo, issued its ultimatum in a letter Wednesday to company CEO Scott Thompson.The letter, released in a regulatory filing, comes a month after Third Point first announced that it wanted four seats on a Yahoo board already undergoing an overhaul.The board currently consists of 11 directors, but Chairman Roy Bostock and three other members announced they will step down at Yahoos annual meeting. The departures are part of an attempt to placate shareholders frustrated with a long-running financial funk that has depressed the companys stock price.Third Point believes Yahoo would fare better if the hedge funds representatives were in the boardroom. Third Points proposed directors are: Daniel Loeb, the hedge funds manager; former NBC Universal CEO Jeff Zucker; former MTV Networks executive Michael Wolf and turnaround specialist Harry Wilson.In Wednesdays letter, Loeb told Thompson he was disappointed with Yahoos dismissive attitude toward Third Points candidates since the two men spoke in a Feb. 17 conversation.The boards stonewalling, apparent insouciance and decision not to engage with us in a serious manner, has left us no choice but to directly approach our fellow owners in an attempt to get Third Points slate elected as directors, Loeb wrote.In a statement, Yahoo said its boards nominating committee is still considering a wide range of highly qualified candidates for its board. The company appointed two new directors, Alfred Amoroso and Maynard Webb, to its board last month.The committee has included Third Points candidates in its thorough review process and will make its recommendations to the full board in due course, Yahoo said.Unless Yahoo accepts Third Points candidates on the board, Loeb pledged to begin his campaign within the next week. That could lead to a showdown that culminates at Yahoos annual meeting, which is usually held in late June.The mutiny would threaten to distract Thompson as he plots his turnaround strategy. Citing unnamed people, the technology blog All Things D recently reported Thompson is considering a tumultuous shake-up that could include thousands of job cuts.Yahoo has only said it is engaged in a process that will generate significant strategic change.Given those plans Loeb urged Thompson to negotiate a truce. You appear to have enough battles to fight already, Loeb wrote.Yahoo shares rose 5 cents to $14.68 in Wednesdays extending trading.