--Loeb says Yahoo's rejection of him as a board member is nonsensical
--Yahoo did say that one Loeb nominee, Harry Wilson, could be an acceptable option
--Loeb wrote that Yahoo has informed him he would be "conflicted" as a director due to the 5.8% stake that his firm Third Point LLC has in Yahoo
(Adds Yahoo comment beginning in the 3rd paragraph.)
By John Letzing Of DOW JONES NEWSWIRES
SAN FRANCISCO (Dow Jones)--Activist investor Dan Loeb fired another shot at Yahoo Inc. (YHOO) Wednesday as part of an ongoing proxy fight between his firm and the Internet concern, arguing that Yahoo's rejection of him as a board member is nonsensical.
In a letter addressed to Yahoo Chief Executive Scott Thompson, Loeb wrote that the company's treatment of his proposal that he and three of his nominees join its board of directors makes "a mockery of good principles of corporate governance."
Yahoo said Sunday that it is making its own appointment of three new members to its board, adding that those candidates are "more qualified" than Loeb.
Yahoo, of Sunnyvale, Calif., did say that one Loeb nominee, Harry Wilson, could be an acceptable option. In addition, the company said it is open to a second, "mutually acceptable" board candidate apart from Third Point's current nominees.
In his letter Wednesday, Loeb wrote that Yahoo has informed him he would be "conflicted" as a director due to the 5.8% stake that his firm, Third Point LLC, has acquired in the company--which could lead Loeb to seek a "short term" solution to Yahoo's difficulties.
"Only in an illogical Alice-in-Wonderland world would a shareholder be deemed to be conflicted from representing the interests of other shareholders because he is, well, a shareholder too," Loeb wrote.
"This sentiment further confirms that Yahoo's approach to Board representation is 'shareholders not welcome,'" he added.
Yahoo countered in an emailed statement that, "Unfortunately, Mr. Loeb rejected our efforts to bring Third Point's perspective into the board room through the offer of two board seats."
"Nevertheless, the Board made clear to Mr. Loeb that it remains open to hearing Third Point's ideas and to working constructively with Third Point, as with all of its shareholders," Yahoo said.
Yahoo is in the midst of a turnaround effort under Thompson, who was appointed in January.
Loeb wrote that Third Point's effort to obtain four board seats at Yahoo does not represent an effort to gain control of the board.
"Any individual voice in the room would be only one of 11 or 12," he wrote. "If one director has too 'short-term' an approach for other members, a healthy debate will ensue and all directors as a group will decide the issue in a fully informed and deliberative manner."
Yahoo shares closed Wednesday down 0.7% at $15.32.
-By John Letzing, Dow Jones Newswires; 415-765-8230; john.letzing@dowjones.com
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