In a so-called 'proxy fight' Microsoft would hope to encourage investors to remove the existing Yahoo board, all of whom are up for nomination this year.
A report in The New York Times on Tuesday suggested that Microsoft may instigate its proxy battle as soon as this week.
The company would then have until 14 March to submit its own choice of directors for shareholders to approve.
Yahoo, meanwhile, has quickly ushered in generous redundancy benefits for employees.
Details revealed in a securities filing suggest that all staff will receive at least four months' salary, with top executives securing two years' worth, in the event of redundancies if the company is sold in the next two years.
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