Large Yahoo Shareholder Backs Board

Yahoo got a show of support on Friday from one of its biggest shareholders for its efforts to defend itself against a proxy fight by the activist investor Carl C. Icahn.

Bill Miller, who runs Legg Mason Capital Management, backed Yahoo’s incumbent board, after weeks of speculation over whether he would support Mr. Icahn’s efforts to unseat those directors. Mr. Miller’s fund holds about 4.4 percent of Yahoo’s outstanding stock.

Because of the size of his portfolio’s holdings, Mr. Miller has been considered a power broker in the dispute between Yahoo and Mr. Icahn, which erupted after the Internet company spurned takeover bids from Microsoft. Now that Mr. Icahn is seeking to replace Yahoo’s board — and then negotiate a sale of Yahoo’s search business to Microsoft — Mr. Miller’s support may prove crucial to Yahoo’s efforts to retain its directors and management.

The battle will be joined at Yahoo’s shareholder meeting, scheduled for Aug. 1. The company is scheduled to report earnings on Tuesday, and it awaits a report on the proxy fight by the RiskMetrics Group, the influential shareholder advisory firm.

Representatives for Microsoft and Yahoo declined to comment. Mr. Icahn could not be reached for comment.

Mr. Icahn contends that Yahoo rejected Microsoft’s bids without considering shareholders’ best interests. Microsoft has offered to buy Yahoo outright, and more recently made a bid to purchase its search business.

“Our company is on a precipice, and our board seems ready to take the risk of seeing it topple,” Mr. Icahn wrote in a letter to shareholders on Monday.

But Mr. Miller said in a statement Friday that he disagreed with Mr. Icahn. “We believe the current board acted with care and diligence when evaluating Microsoft’s offers,” he said.