Updated: Icahn: Yahoo Should Hang $34.375 Pricetag On Itself; Lays Out Plan If He Wins Proxy

It’s the battle of the dueling public letters: Carl Icahn isn’t buying Yahoo’s (NSDQ: YHOO) recent argument that Microsoft (NSDQ: MSFT) has no interest in acquiring it anymore. In a fresh letter to the company, the activist investor calls on the company to offer itself up to Microsoft at $34.375. This is higher than Microsoft’s last offer, around $33, but thinking is that if Yahoo shelves its poison pill severance plan (the company denies it’s a poison pill) and its plans to do a defensive partnership (ad deal with Google) then Microsoft may bite. the letter notes that as long as Yahoo keeps talking about some alternative partnership with Microsoft (like a deal to just sell of search) then of course, Microsoft will say it doesn’t want the whole thing. Icahn adds in the letter that he’d like to see Yang replaced with a new “experienced” CEO (Yang would be relegated to Chief Yahoo if Icahn wins) and that the company should cease searching for any deal that doesn’t deliver at least $33 per share to investors.

From the full letter filed with the SEC: Dear Roy:

While you may take issue with the content of my letter, I take issue with your oversight of Yahoo! Again, I stand by my characterization of your “poison pill” severance plan and I find it humorous to see you attempt to defend it. Roy, it is you who “misrepresents and misstates the details” of the plan. Much like the rhetoric in many well known political campaigns, you keep repeating misstatements in the hopes that by repeating misstatements enough times it will convince your shareholders that these misstatements are valid.

Update: Separately, Icahn has filed an updated, preliminary proxy. Mostly it’s the same as an early one, with a few interesting details. At a cost of up to $625k, Icahn has retained the services of D.F. King, the well-known proxy solicitation firm. “It is anticipated that D.F. King will employ approximately 60 persons to solicit proxies from Yahoo Stockholders for the Annual Meeting.” The statement also picks sides on some shareholder proposals being presented. While they’re urgning an “against” vote on matters relating to censorship and human rights, the filing urges shareholder to vote for a proposal called “pay-for-superior performance”. Basically, it’s a compensation model based more heavily on performance, and it’s one that the Yahoo board has urged shareholders to vote against.