Following a brusque exchange earlier this week between Icahn and Yahoo chairman Roy Bostock, regarding Yahoo's rebuffing of Microsoft's takeover attempt in May, Icahn today warned he will sack Yang should his proposed board replace the current Yahoo board.
Icahn has spent billions of dollars in recent weeks to build up an estimated 4% stake in Yahoo. He has used his new status as one of the single-biggest individual shareholders in Yahoo to nominate an entirely new board to replace the existing Yahoo board - a board which he feels would be receptive to a Microsoft sale.
In a letter to Bostock, released today, Icahn said that if his proposed board gains control of Yahoo, then he would push the new board to offer publicly to sell Yahoo to Microsoft, "in a friendly and cooperative transaction". Should Microsoft not be interested in a deal after such a statement, he said, then he plans to push for a deal to outsource is search ads to Google.
He added: "I intend to ask our new board to hire a talented and experienced chief executive(attempting to replicate Google's success with Eric Schmidt) to replace Jerry Yang and return Jerry to his role as ‘Chief Yahoo'."
Earlier this week, Icahn called on the Yahoo board to scrap an employee retention plan that he claimed drove up the potential costs of a Microsoft takeover attempt to a prohibitive level. In a letter, he labelled the action a "poison-pill" - a corporate term that describes a company policy that deters would-be suitors from buying a company.
Meanwhile, Yahoo chairman Roy Bostock said Icahn's letter "seriously misrepresents and manipulates the facts".
The employee retention plan could trigger payments of up to $2.4bn (£1.2bn) if Microsoft pulled off a successful takeover, by ensuring that employees are handed severance payments in the event of a company takeover
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