Things haven’t been stellar for AOL lately, but they are performing better than many expected. Months ago, Starboard, one of AOL’s major shareholder, voiced their concerns over AOL’s performance and what could be done to unlock shareholder value.

More recently, at the end of February, Starboard issued a formal letter to the AOL board of directors asking that they be allowed to nominate some representatives of their own to the board. Of course, AOL would have none of it, and ever since, AOL has been steeped in a proxy battle that has been dividing shareholders and stalling forward progress.

Now, as AOL stock reaches a 52-week high driven by a patent deal with Microsoft, the company is striking back against Starboard and calling for members to vote for AOL in the Starboard proxy battle. In today’s SEC filing, they highlight their financial accomplishments and remind everyone of Starboard’s shortcomings with their proposed board nominees.

They make it clear that Starboard’s nominees would bring nothing to further AOL’s already diverse and resourceful board of directors, and might actually hurt them. Take a look at the following key statements from AOL’s SEC filing earlier today.

AOL HAS THE RIGHT TEAM AND STRATEGY IN PLACE TO FURTHER
ENHANCE STOCKHOLDER VALUE:

* AOL has made significant operational and financial progress since spinning off from Time Warner only two and a half years ago.

* AOL has a clear, concise, and publicly communicated growth plan and is on track to meet its strategic goals.

* AOL’s stock is a top performing stock in our industry year-over-year and year-to-date.

* AOL stock is up 166% since its low as a direct result of the action taken by AOL’s management and Board.

* AOL’s Board nominees are diverse and have significant operational, financial and public board experience in AOL’s areas of strategic focus.

* All of AOL’s senior management and directors own stock in the Company and AOL’s Chairman and CEO is the single largest individual investor in the Company.

* Starboard’s slate does not have a long-term strategy or relevant industry experience.

AOL’S CLEAR STRATEGY IS DELIVERING IMPROVED RESULTS:

* The Board has unlocked over $1.7 billion in value in the last two years.

* AOL has returned capital to stockholders by buying back 14% of outstanding shares, and has committed to return all of the proceeds of the almost $1.1 billion patent sale to stockholders.

* AOL has reported three consecutive quarters of better than expected earnings results, which demonstrate that the Board’s strategy is working.

* The Board has presided over significant improvement of AOL’s operations and financial results, including reducing annual costs by approximately $500 million prior to investment in areas of strategic focus, reducing headcount by 37%, ending unfavorable distribution deals and exiting unprofitable markets.

STARBOARD DOES NOT HAVE A LONG-TERM STRATEGY
AND THEIR NOMINEES DO NOT HAVE THE RIGHT EXPERIENCE:

* Rather than present a reasoned strategy for driving stockholder value, Starboard has simply criticized AOL’s long-term strategy and investments in content-based assets, and we believe their goal is to break-up and liquidate the company.

* AOL’s Board of Directors is diverse and highly qualified. The AOL Board has significant operational, financial and public board experience.

* On the contrary, we believe Starboard’s nominees would negatively impact the Board’s level of industry expertise, public company experience and diversity.

* AOL is actively engaged in seeking two new Board members, but believes Starboard’s slate will damage the Company and its relationship with advertisers.

* Notwithstanding the negative impact of Starboard’s last four public statements with respect to AOL’s strategy, AOL’s stock hit a 52-week high this week, based on AOL’s operating execution, strategic momentum, and continuing to unlock stockholder value.

So we can expect this proxy battle between Starboard and AOL to start heating up. I would imagine after this move from AOL, the tides will shift and AOL’s board of directors will want some immediate action and closure on the issue before it begins hurting performance and public relations any further. We’ll keep you updated.