Yahoo! Inc. investor Starboard Value LP nominated nine directorsto replace the entire board at the struggling Web portal, which itcontends has been mismanaged under Chief Executive Officer MarissaMayer.

Starboard, a longtime critic of the company and an activistshareholder with 1.7 percent of Yahoo shares, nominated its chiefexecutive officer, Jeffrey Smith, among others for election atYahoo's annual meeting later this year, according to a letter toshareholders.

With little progress to show for her revival efforts after morethan three years, investors are losing patience with Mayer, who haspresided over sluggish sales growth and failed to separate Yahoo'smain Web business from its multibillion-dollar stake in AlibabaGroup Holding Ltd. Starboard first began to call for changes in2014 and recently stepped up criticism of management, even as Yahoosaid it would consider alternatives, including the sale of thecompany's core operations.

“We have been extremely disappointed with Yahoo's dismalfinancial performance, poor management execution, egregiouscompensation and hiring practices, and general lack ofaccountability and oversight by the Board,” Starboard said in aletter to shareholders Thursday. “We believe the Board clearlylacks the leadership, objectivity, and perspective needed to makedecisions that are in the best interests of shareholders.”

Yahoo said it “noted” Starboard's announcement regarding theboard nominations. The board's nominating and governance committeewill review the nominees and respond “in due course,” Yahoo said ina statement.

For Mayer, who sits on the board, it's another difficult step inher tenure that began as a turnaround effort when she arrived inJuly 2012. In February, she rolled out her latest plan to overhaulthe company, calling for employee cuts, product closures, and otherreductions to help drive efficiency and focus on growthopportunities.

Earlier this month, Mayer said she would do what's best forinvestors as Yahoo considers its strategic options and she wouldlike to keep her job leading the company even if it changeshands.

“I certainly hope the strategic alternative has a place for me,”she said in an interview on the “Charlie Rose Show” televisionprogram. “But that said, we'll obviously honor our commitments toour shareholders.”

Mayer stands to collect at least $12.4 million if she'sterminated, including $3 million cash severance and about $9.34million in equity vesting early and certain health and outplacementbenefits, according to data compiled by Bloomberg.

Yahoo shares fell 1.8 percent to $34.19 at 9:46 a.m. They hadgained 4.6 percent this year through Wednesday.

Nomination of Entirely New Board 'a Little Surprising'

“The fact that Starboard chose to nominate a full slate ofdirectors was a little bit surprising,” said Paul Sweeney, ananalyst at Bloomberg Intelligence. “It shows that they are notcomfortable with the pace of restructuring that the management teamand the board have undertaken so far.”

Earlier this month Yahoo added two new independent directors whohave experience helping sell companies as it sought to bulk up theboard to prepare for a proxy fight.

Starboard met with Yahoo on March 10, the day Yahoo appointedEric Brandt and Catherine Friedman to the board, according to aperson familiar with the matter. Starboard, who was not alertedabout the new appointments prior to the meeting, has had contactwith the Web portal since then, said the person, who asked not tobe identified because the matter is private.

Starboard's outreach to Yahoo shareholders through proxyadvisers has indicated tremendous support for itsefforts, which gives it confidence in initiating the proxyfight, according to the same person.

Starboard is one of the most prolific U.S. activist investorsand has a track record of successfully pushing companies to heedits wishes. In 2014, Starboard persuaded investors to replaceDarden Restaurants Inc.'s entire 12-member board after theunpopular sale of its Red Lobster chain to Golden Gate Capital.Starboard also recently pressured office-supply rivals Staples Inc.and Office Depot Inc. into a merger.

Starboard held less than 1 percent of Yahoo stock at the end of2015, according to data compiled by Bloomberg.

The fight with Starboard isn't Yahoo's first run-in withdisgruntled activists. In 2012, Third Point LLC's Dan Loebsucceeded in getting himself and two nominees on the Yahoo boardafter tangling with former CEO Scott Thompson, who stepped downafter failing to correct errors in his credentials. Later thatyear, Loeb was instrumental in getting Mayer to lead thecompany.

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