Icahn joins Yahoo board, turning up heat for deal

SAN FRANCISCO (Reuters) - Yahoo Inc's board confirmed billionaire investor Carl Icahn as a director, while board member Robert Kotick tendered his resignation as part of a previously announced deal, the company said on Wednesday.

In a filing with U.S. securities regulators, the Internet company said Kotick had resigned following the company's August 1 annual shareholder meeting and confirmed that Icahn had been named under a settlement deal that averted a proxy battle with a rival slate of board candidates led by Icahn.

Under the deal, the two additional board seats are to be chosen by mid-August from a list that includes Icahn's original slate of candidates and Jonathan Miller, former chief executive Time Warner Inc's AOL business. Subsequently, Time Warner stepped in to bar Miller from joining Yahoo, saying the conglomerate would enforce a non-compete pact with him.

Analysts expect Icahn and the new directors to pressure the board to consider a variety of strategic options for the company, including a potential transaction with Microsoft Corp or disposal of its substantial Asian assets.

Yahoo confirmed the changes a day after it disclosed that a recount of Friday's vote for its board had revealed a strong protest vote against five of nine directors, including Chief Executive Jerry Yang and Chairman Roy Bostock.

Yang has been under pressure since the breakdown in May of attempts to negotiate a merger deal with Microsoft and other questions about his leadership. The substantial negative vote against him and other board members could increase pressure on Yang to step aside as CEO, Wall Street analysts said.

The agreement with Icahn, announced July 21, ended a showdown for control of the company at the annual meeting. Icahn had originally sought to replace the entire board with his own nominees and oust Yahoo Chief Executive Jerry Yang.

Yahoo is expanding its board to 11 members from nine. Eight of its existing directors remain on the board while Kotick, the chief executive of recently merged Activision Blizzard, stepped aside after his reelection on Friday.

Outgoing director Kotick received 92.4 percent of votes in favor for his reelection while Bostock had the lowest vote in favor at 60.4 percent.

Icahn controls about 59 million shares of Yahoo, or 4.98 percent of outstanding shares. Once Icahn nominees join, Icahn and his affiliates surrender the opportunity to wage a new battle to dislodge Yahoo's board, the company has said.

Shares of Yahoo rose 20 cents to $20.02 in mid-session trading on Nasdaq on Wednesday.

(Editing by John Wallace, Leslie Gevirtz)