It's war: A hedge fund goes after Yahoo's entire board of directors

Hedge fund Starboard Value has been clamoring for change at Yahoo for a while, waiting for the company's leadership to begin making moves to tighten the company's financial performance.

As of Thursday, Starboard is done waiting.

The hedge fund has issued a letter nominating an entirely new slate of board members. 

It's the start of an attempted coup at Yahoo's upcoming 2016 shareholder meeting in June. 

"We believe the Board clearly lacks the leadership, objectivity, and perspective needed to make decisions that are in the best interests of shareholders," Starboard managing member Jeffrey Smith wrote in the letter.

If successful, the new board would almost certainly relieve CEO Marissa Mayer of her job and install a new chief executive.

Speculation on who it could be has already begun, including Rick Hill, one of the people that Starboard wants to place on Yahoo's board of directors.

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Mayer has come under increasingly loud demands that she sell Yahoo's core business, which has suffered a consistent decline in the past few years. 

Those demands are in part due to Yahoo's sizable stake in Chinese e-commerce giant Alibaba. Yahoo needs to get that money into the hands of its shareholders while doing its best to avoid any major tax hits.

One way to do this would be for Yahoo's "core business" (essentially everything the public knows or sees of Yahoo) to be sold off, leaving the Alibaba shares behind. 

Yahoo issued a very muted response to Starboard's letter.

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For some time, Mayer had resisted those demands and insisted that her plan to return Yahoo to its glory days was working. In February, it seemed like she had begun to accept that Yahoo may have to sell.

But the waiting has gone on, and Starboard has had enough.

Starboard said it currently owns about 1.7% of Yahoo, which is a sizable portion of a large, public company. 

In the letter, Starboard said that it had attempted to work with Yahoo's existing leadership to steer the company into a better direction. 

It hasn't worked.

"At every step of the way, management and the Board have pushed us away," Smith wrote.

Why is Starboard so upset? Well, at least according to Smith, Yahoo's leadership has failed at just about everything, most notably suffering a fall in profits while spending $2.3 billion on acquisitions since 2012 that have already lost $1.2 billion in value.

"Looking beyond the operating results, Yahoo has failed in many other respects, including abysmal pay-for-performance, significant conflicts of interest, and egregious hiring and governance practices," Smith wrote.

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