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Starboard, which has been pushing for changes at Yahoo since
2014, said it would nominate nine members to the Yahoo board.
"It is unfortunate that this action is necessary," Starboard
said in a letter to Yahoo shareholders on Thursday.
"We have been extremely disappointed with Yahoo's dismal
financial performance, poor management execution, egregious
compensation and hiring practices, and general lack of
accountability and oversight by the board."
However, the hedge fund which owns about 1.7 percent of Yahoo,
said it remained open to discussions with Yahoo and was hopeful
it could reach an agreement to get involved with the company.
Yahoo's shares were up 0.7 percent at $35.03 in premarket
trading.
A proxy fight would come at a time when Yahoo is pressing ahead
with an auction of its core Internet business. Shareholders have
until March 26 to submit nominations for board members to be
elected at Yahoo's annual meeting this spring.
Yahoo launched an auction of its core business in February after
it shelved plans to spin off its stake in Chinese e-commerce
giant Alibaba Group Holding Ltd <BABA.N>.
Some Yahoo investors are concerned that a proxy fight would
hinder the auction effort, sowing doubts among potential buyers
over the stability of Yahoo's board, sources have said.
Starboard's nominees include its chief executive, Jeffrey Smith,
and Eddy Hartenstein, the former chief executive of Tribune Co.
Yahoo could not be immediately reached for comment.
(Reporting by Supantha Mukherjee in Bengaluru; Editing by
Anupama Dwivedi)
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