What was expected to be a firestorm of shareholder fury fizzled into a mundane annual meeting for Yahoo on Friday, despite lingering disappointment...

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SAN JOSE, Calif. — What was expected to be a firestorm of shareholder fury fizzled into a mundane annual meeting for Yahoo on Friday, despite lingering disappointment among some shareholders about a failed merger with Microsoft that could have been worth $47.5 billion.

Some shareholders expressed displeasure by withholding their votes in the re-election of Yahoo’s current directors. But the resistance wasn’t as intense as last year, when more than 30 percent of the vote was withheld in the election of three directors.

In this year’s balloting, only two directors — Chairman Roy Bostock and Arthur Kern — were opposed on ballots representing at least 20 percent of Yahoo shares. Yahoo Chief Executive Jerry Yang, who steered the Microsoft negotiations with Bostock, was approved by 85 percent of the shares cast.

With billionaire investor Carl Icahn — a chief critic of Yahoo’s management — absent, Bostock spent much of the session defending the decision to reject Microsoft and trying to assure shareholders that Yahoo’s top managers were open to selling to the software giant.

“There was never a conversation that took place … where we did not discuss shareholder value,” Bostock said. “I want no one to make a mistake about that.”

Yang’s strategy

Company CEO and co-founder Jerry Yang, meanwhile, tried to reassure shareholders that a strategy he launched last year to boost advertising revenues was proceeding as planned, despite the protracted sideshow of the Microsoft bid.

“We have a very good operating model … and we believe our operating model will allow us to accelerate our growth,” Yang said.

A Microsoft offer of $47.5 billion, or $33 a share, in May would have netted stockholders almost $20 billion. Instead, Yahoo’s shares today are trading around $20, about $3 less than a year ago, as the Internet pioneer continues to lose ground to archrival Google.

Addressing Yahoo’s board, Eric Jackson, who runs Ironfire Capital, a Naples, Fla., activist investment firm, told members, “I think you have overpaid (executives), overplayed your hand with Microsoft and overstayed your welcome on the board.”

Other shareholders, however, praised the company’s decision not to sell.

“Microsoft was the wrong corporation,” said Richard Lammerding, who said he and his wife own 1,200 shares of Yahoo.

“They are a corporation-destroying, over-the-hill, green-tentacled octopus from Redmond, and my support and my wife’s support is with this board and this management team.”

In taking shareholders through the details of the Microsoft discussions, Bostock said Yahoo’s board got only one written offer to buy the company, a $31-per-share bid made by Microsoft CEO Steve Ballmer on Jan. 31.

A subsequent Microsoft offer in May, he said, was actually just an “offhand comment” from Microsoft executives that “there may be a few more dollars on the table.”

Nonetheless, Bostock said, Yahoo’s board considered a potential $33 per share sale to Microsoft. But when he and others sought more information, Microsoft withdrew its offer to buy the company, according to Bostock.

“I cannot to this day tell you why they did that,” he said.

In a statement, Microsoft denied Bostock’s characterization of the talks.

“Yahoo is attempting to rewrite history yet again with statements that are not supported by the facts.”

Much of the tension surrounding Friday’s shareholder meeting was diffused by a July 21 agreement between Yahoo and Icahn, who had launched a proxy fight to protest the failure to reach a deal with Microsoft. Icahn owns about 5 percent of Yahoo’s outstanding shares.

Icahn had been planning to argue at the meeting that shareholders should vote out all of Yahoo’s board members and replace them with a slate of his own.

Instead, under the new agreement, Yahoo will expand its board from nine members to 11, give Icahn a board seat, and pick two other board members from a slate of Icahn nominees.

Yahoo’s board has until Aug. 15 to pick from that list, which includes investor Adam Dell, brother of computer magnate Michael Dell, and Dallas Mavericks owner Mark Cuban. Board members did not discuss the slate at Friday’s meeting.

Also as part of the deal with Icahn, eight of Yahoo’s nine directors had to stand for re-election Friday. All were re-elected. One board member, Robert Kotick, decided previously to step down.

Icahn’s blog comments

Icahn announced Thursday in his personal blog that he wouldn’t attend Friday’s meeting, saying it would be counterproductive given his earlier agreement.

Icahn wrote in his blog that he still wants to search for ways to boost the value of his investment in Yahoo, through a sale of the company or otherwise, but indicated he’s now willing to play nice.

“A few days ago, I met with both Jerry Yang and Roy Bostock and I believe both gentlemen genuinely wish that we will be able to work together to enhance value,” Icahn wrote. “While we still disagree on many points, I have great hope this will be the beginning of a beautiful friendship.”

Information from The Associated Press is included in this report.