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Right now, there is another update in the ongoing saga at Yahoo! Inc. (NASDAQ:YHOO), which ValueWalk, has been covering extensively.

Scott Thompson, CEO of Yahoo! Inc.  just released a letter to employees. In the letter, the CEO, calls the employees ‘yahoos.’ The letter discusses the three board members, which Yahoo! stated in a filling yesterday, that it wishes to add to the board; John Hayes,  Peter Liguori and Tom McInerney.

Scott also mentions the proxy war with largest shareholder, Dan Loeb, and urges employees to ignore Loeb’s request.

The letter states (emphasis ours):

The Board offered a seat to one of Third Point’s nominees, Mr. Harry Wilson, and also said it would agree to appoint an additional mutually acceptable candidate, outside of Third Point’s three other nominees. Unfortunately, as you’ll see in the press release, Third Point’s CEO Dan Loeb rejected that proposal, insisting that unless he personally was appointed to the Board, Third Point would continue its proxy contest.

As the letter itself mentions, Thompson expects Loeb to continue the proxy war. It appears that Thonpson is trying to rally employee support for his proposal, as Loeb might be able to sway other large shareholders fed up with Yahoo’s management.

Below is the full release:

Dear Yahoos:

Attracting top-notch new directors to our Board is a sign of Yahoo!’s potential, and today I am pleased to report we have appointed three new Board members who come to us from the highest tier of the media, advertising and marketing, and internet industries. The attached press release will introduce you to: John Hayes, Executive Vice President and Chief Marketing Officer of American Express Company; Peter Liguori, former Chief Operating Officer of Discovery Communications, Inc. and former Chairman and President of Entertainment of Fox Broadcasting Network; and Tom McInerney, until just recently the Chief Financial Officer of IAC/InterActiveCorp.

Having met all three, I can attest to their experience, their outstanding track records, and the range and depth of their vision about our business. They are also independent thinkers who – along with the rest of our newly constituted Board – will, I expect, challenge and engage me and the entire leadership team as together we move fast and think bigger about what Yahoo! can and should be.

As you will see from the press release, the Board and its Nominating and Corporate Governance Committee appointed these directors after a process that also included consideration of the individuals proposed by Third Point. In the end, the Committee decided that these three individuals’ credentials and track record best qualified them to serve Yahoo! shareholders.

At the same time, in recognition of Third Point’s stock ownership, and in an effort to avoid the expense and distraction of a proxy fight, the Board offered a seat to one of Third Point’s nominees, Mr. Harry Wilson, and also said it would agree to appoint an additional mutually acceptable candidate, outside of Third Point’s three other nominees. Unfortunately, as you’ll see in the press release, Third Point’s CEO Dan Loeb rejected that proposal, insisting that unless he personally was appointed to the Board, Third Point would continue its proxy contest. Given that the Board’s Committee had determined that other candidates were more qualified, the Board indicated that – although it remains open to hearing Third Point’s viewpoint and to working constructively with them – such an appointment was not in the best interest of Yahoo! and its shareholders.

I promise you this: the Board and I will not be distracted from doing the hard work necessary to get Yahoo! back on track. We are looking ahead, focused on all that Yahoo! can become. Together with our new directors, we can all bring Yahoo! back to being the forward-leaning engine of growth and innovation we all want it to be.
Scott