"Such actions would be a clear indication to us that significant leadership change is required at Yahoo," Smith wrote in a Jan. 8 letter to Mayer. Smith controls 7.7 million Yahoo shares a 0.8 percent stake through Starboard Value LP. The New York hedge fund last year reshuffled the board of directors at Olive Garden owner Darden Restaurants and in 2012, Smith unsuccessfully tried to shake up AOL Inc. In this go-round, Smith is urging Mayer to merge with AOL as part of Yahoo's spin-off of its Asian investments, and then launch $1 billion in cost cuts, most likely laying off thousands of workers. Smith isn't keen on Mayer buying anything besides AOL because she has already spent $1.7 billion on a grab-bag of more than three dozen acquisitions that haven't yet helped lift Yahoo's revenue.