Yahoo on Tuesday set its annual shareholder meeting on for August 1, as it braced for a showdown with billionaire activist investor Carl Icahn, who is mounting a proxy fight for control of Yahoo. Earlier, The Wall Street Journal reported that Icahn would seek to remove Jerry Yang as Yahoo chief executive, citing the company's failure, so far, to reach a merger or partnership deal with Microsoft.

Icahn had proposed an alternate slate of directors for Yahoo's board, but, until now, had not directly targeted Yang over the breakdown in talks a month ago in Microsoft's merger offer, then valued at about $47.5 billion.

Yahoo fired back in a statement: "Yahoo's board of directors, including Jerry Yang, has been crystal clear that it would consider any proposal by Microsoft that was in the best interests of its shareholders."

Yahoo noted it has held extensive talks with Microsoft for the last several months, culminating in Microsoft's decision not to pursue a deal.

Icahn cited details from court documents related to a shareholder suit that were unsealed on Monday.

The documents showed how Yahoo had taken steps to rebuff a Microsoft takeover bid months before the software maker made its offer public on February 1.

The lawsuit argued that Yahoo had taken aggressive steps to block a deal, including the adoption of a costly plan to retain employees, leading up to a breakdown in talks with Microsoft.