Apparently that ticking noise got plain unbearable for just about everybody, as Yahoo announced this morning that it struck a compromise to avoid a proxy fight with Carl Icahn.

Icahn had paraded the idea that he had solidarity with Microsoft, and Yahoo had finally begun using Icahn-like hyperbole in dissing the activist investor. So the new agreement was surely born out of mutual desperation, given that the looming proxy vote put both in unfavorable positions.

For Yahoo, which is surely getting updated vote totals every day from their proxy solicitor, the risk of getting the boot was undoubtedly looking far to real.

For Icahn, the risk of losing was just as real. Even more so, the downside of winning was becoming increasingly apparent, as an Icahn-run Yahoo would have had little negotiation leverage with Microsoft.

So Jack Flack speculates that Yahoo chairman Roy Bostock tapped Icahn on the shoulder, and said something like, "You know, Carl, we both actually want the same thing. When we're divided, it's $28 stock. United, we can get $31, maybe even $32."

Now the attention goes back on Microsoft, which has already deviated from Steve Ballmer's assertion that he would not deal with the current Yahoo board and management.

Here's the parse of the Yahoo statement.

Yahoo: Yahoo! Inc. (Nasdaq:YHOO), a leading global Internet company, announced today that it has reached an agreement with Carl Icahn to settle their pending proxy contest related to the Company's 2008 annual meeting of stockholders.

Translation: The vote was looking dodgy, so we decided to deal with Carl.

Yahoo: Under the terms of the settlement agreement, eight members of Yahoo!'s current Board of Directors will stand for re-election at the 2008 annual meeting: Roy Bostock, Ronald Burkle, Eric Hippeau, Vyomesh Joshi, Arthur Kern, Mary Agnes Wilderotter, Gary Wilson and Jerry Yang.

Translation: We are not giving up seats. We are simply diluting.

Yahoo: In view of the settlement agreement with Mr. Icahn, and the termination of the proxy contest, Robert Kotick has decided not to stand for re-election to the Board at the 2008 annual meeting.

Translation: This was not the way he planned to spend his summer.

Yahoo: Following the 2008 annual meeting, the Yahoo! Board will be expanded to 11 members.

Translation: It's Jerry's ball, so he gets to play quarterback.

Yahoo: Carl Icahn will be appointed to the Board and the remaining two seats will be filled by the Board upon the recommendation of the Board's Nominating and Governance Committee from a list of nine candidates recommended by Mr. Icahn, which includes the eight remaining members of the Icahn slate of nominees

Translation: We're hoping to find two who use e-mail.

Yahoo: ...and Jonathan Miller, currently a partner in Velocity Interactive Group and former Chairman and CEO of AOL.

Translation: ...and Jonathan Miller, now the most likely successor to Jerry.

Yahoo: As part of the settlement agreement, Mr. Icahn, who owns an aggregate of 68,786,320 shares, or 4.98% of Yahoo! common stock, has agreed to withdraw his nominees for consideration at the annual meeting and to vote his Yahoo! shares in support of the Board's nominees.

Translation: This is almost as big of a victory as the alliance with Google.

Yahoo: "We are gratified to have reached this agreement, which serves the best interests of all Yahoo! stockholders," said Yahoo! Chairman Roy Bostock. "We look forward to working productively with Carl and the new members of the Board on continuing to improve the Company's performance and enhancing stockholder value. Yahoo! is a world-class company with an extremely bright future, and collaborating together, I believe we can help the Company achieve its ambitious goals."

Translation: Carl realized that a proxy showdown -- no matter what it's outcome -- only strengthened Microsoft's negotiating hand. We convinced him we could get $31, not the $29 he was going to settle for.

Yahoo: "This agreement will not only allow Yahoo! to put the distraction of the proxy contest behind us, it will allow the Company to continue pursuing its strategy of being the starting point for Internet users and a must buy for advertisers," said Yahoo! Co-founder and Chief Executive Officer Jerry Yang.

Translation: Finally, things will go back to the way they used to be.

Yahoo: "No other company in the Internet space has our unique combination of global brand, talented employees, innovative technologies and exceptional assets, attributes that will help us take advantage of the large and growing opportunity ahead of us. I look forward to working together with our new colleagues on the Board to make that happen."

Translation: No other available company has our share position in display or search.

Yahoo: Mr. Icahn said, "I am very pleased that this settlement will allow me to work in partnership with Yahoo!'s Board and management team to help the Company achieve its full potential.

Translation: I am very pleased that the nose of the camel is now inside the tent.

Yahoo:
While I continue to believe that the sale of the whole Company or the sale of its Search business in the right transaction must be given full consideration, I share the view that Yahoo!'s valuable collection of assets positions it well to continue expanding its online leadership and enhancing returns to stockholders.

Translation: We can get $31.

Yahoo:
I believe this is a good outcome and that we will have a strong working relationship going forward.

Translation: I'm familiar with how this works. If they thought I was a pain when I was on the outside, wait until the first board meeting.

Yahoo: Additionally, I am happy that the board has agreed in the settlement agreement that any meaningful transaction, including the strategy in dealing with that transaction, will be fully discussed with the entire board before any final decision is made."

Translation: We've agreed to lock arms at $31, asking for $33.

Yahoo: In response to Mr. Kotick's decision to step down from the Board, Mr. Bostock said, "I would like to personally thank Bobby for his dedicated service to Yahoo! these past 5 years. Bobby has been a valuable resource to our Board and the Company and we are grateful for his contributions. He wanted to help see the Company through this recent chapter, but made it clear to me that once the proxy contest was resolved, he was eager to focus his efforts on his work as CEO of the newly merged Activision Blizzard and his other business and civic pursuits."

Translation: Bobby has his own headaches to manage. But I wish I was Bobby.

Yahoo: The Company intends to file the full text of the settlement agreement later today with the Securities and Exchange Commission, and will also file and mail to its stockholders, supplemental proxy material.

Translation: The Company hopes it got ahead of the next round of stories that will likely come when the details fo the agreement become public.