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Yahoo will likely pay millions for proxy fight

Starboard Value's effort to overthrow Yahoo's entire board will be one of the biggest proxy fights in years, and likely one of the most expensive.

While discontent is high among Yahoo stockholders, proxy fights against companies Yahoo's size are rare, and successfully replacing a full board is even rarer. Winning a proxy fight isn't free — companies can spend millions on lawyers, solicitation firms and other costs like mailings to shareholders.

On average, companies spend a few million on a single proxy fight, but Yahoo will likely pay more to avoid a wholesale management change. The costs tend to go up with a company's market cap at the time of the campaign, according to an earlier analysis of FactSet data. Here's how the data look today, categorized by the winner of each proxy fight:

If the relationship in the historical data holds true, Yahoo would be expected to pay about $6.2 million in proxy solicitor fees and other costs. That's not a lot for a company with nearly $5 billion in revenue, but it's not how most companies would like to use their cash.

On average, CNBC.com data and an earlier analysis from ValueWalk suggest that the dissident group — in this case, Starboard — tends to pay less during a proxy fight than the company under attack. For proxy fights with reported costs in the FactSet database, companies paid on average $1.5 million over the last decade while dissidents paid a little over $700,000.

That may be a result of the incentives facing an activist investor: The investor wants to be able to squeeze a profit out of the deal, while management simply wants to keep control of the company.

Unfortunately for Yahoo, it doesn't look like there is much of a relationship between the amount of money spent on a proxy fight and its eventual outcome, according to the FactSet data.

Still, there have been few cases of complete victories against companies Yahoo's size. It's more common for activists to get part of what they want through a split (not all nominees were elected or solicited items approved) or a settlement or concession.

Here are the top proxy fights by the company's total costs and the outcomes: