SAN FRANCISCO - Yahoo Inc. averted a showdown with rabble-rousing investor Carl Icahn on Monday by giving him three seats on its board of directors in a truce that still leaves the door open for a possible sale to Microsoft Corp.
The compromise spares Yahoo from more bickering with Icahn, an acerbic billionaire who had spent the past two months spearheading a rebellion to replace the Internet company's entire board in retaliation for its rejection of Microsoft's $47.5 billion takeover bid in May.
The duel had been scheduled to culminate in a shareholder vote at Yahoo's Aug. 1 annual meeting.
It now appears there will be fewer fireworks at that gathering, although some Yahoo shareholders are still expected to vent about the board's inability to get a deal done with Microsoft after six months of wrangling.
The main order of business will be the cease-fire giving Icahn three of the 11 seats on Yahoo's board, which will be expanded to make the deal possible.
Eight of Yahoo's current nine directors will stay, leaving the company's current management -- headed by Chairman Roy Bostock and Chief Executive Jerry Yang -- in the driver's seat.
Robert Kotick, CEO of video game maker Activision Blizzard Inc. and a Yahoo director for five years, will surrender his seat as part of the agreement.
But the compromise, negotiated over the weekend, doesn't necessarily settle Yahoo's fate, which has been unclear since Microsoft made its first unsolicited offer in January.
