May 8, 2008 2:04 PM PDT

Microsoft proxy slate free to go

Posted by Dawn Kawamoto

Microsoft has released the members of its Yahoo dissident directors slate from their obligation, according to a source familiar with situation, now that the company has withdrawn its $47.5 billion unsolicited buyout bid.

The move is yet another sign Redmond is putting its contentious Yahoo acquisition efforts in the past, but it's unclear whether the software giant will lend any support to other shareholders who may take up the proxy battle.

Yahoo shareholders have until the end of day on May 15 to name an opposition slate to run against the company's board of directors. Yahoo's 10 director seats are up for re-election to a one-year term on July 3.

Microsoft had assembled a slate of 10 dissident directors and 2 alternates as part of its proxy slate. All will now be free to join efforts by Yahoo shareholders to assemble a proxy slate of their own.

Eric Jackson, a Yahoo shareholder activist, is working on assembling such a slate.

Jackson, responding by e-mail Thursday, said he's "talking to lots of people" and "trying to get things organized," though nothing has yet been finalized.

As part of his efforts, Jackson is reaching out to some of the people who were on Microsoft's slate, as well as large institutional investors of Yahoo.

Jackson, or any other investor who embarks on a proxy fight with Yahoo, faces the challenge of convincing investors to vote for their slate, a task especially difficult in absence of a buyout bid on the table, say proxy solicitors.

An exchange offer gives investors comfort, in that they know that if they elect the opposition slate that board would likely remove the anti-takeover measure Yahoo has in place, paving the way for a buyout of the company.

Without an exchange offer on the table, investors have to take a leap of faith that Microsoft or some other buyer will step up to the plate and buy the company once the shareholder rights plan, or "poison pill," has been removed.

Stay tuned. The May 15 deadline is only a week away.