Major shareholder advisory firm backs Yahoo board

Yahoo's deal with Icahn, reached Monday, lowered the stakes of the director vote that will take place the company's Aug. 1 annual meeting. Under the agreement, Icahn will join an expanded Yahoo board along with two allies that must be approved by the Sunnyvale, Calif.-based company. The deal ensures Icahn will be involved in any discussions involving a proposed sale of all or part of Yahoo.

Icahn, a billionaire, bought a 5 percent stake in Yahoo in hopes of working out a sale to Microsoft, which withdrew a $33 per share offer in early May after Yahoo Chief Executive Jerry Yang asked for $37 per share.

Yahoo's stock price stood at $20.53 after gaining 14 cents Thursday.

Spurred by its unhappy shareholders, Yahoo has indicated it's willing to sell for $33 per share, or $47.5 billion, but Microsoft now says it wants to buy only Yahoo's online search operations. Yahoo's current board, though, has concluded it would be a bad idea to spin off its search engine.

Until this week's compromise, Icahn had been leading a shareholder rebellion aimed at replacing Yahoo's directors, including Yang, with his own slate of hand-picked candidates.

Even though Icahn has backed off, many Yahoo shareholders remain upset with the board handling of the Microsoft negotiations and some are expected to lash out at the Aug. 1 meeting.