Jerry Yang is stepping down as the CEO of Yahoo!, the company he co-founded 13 years ago, after months of mounting pressure. Yang, who took over as CEO in June 2007, will remain in the post until the board finds a replacement.

"Jerry and the board have had an ongoing dialogue about succession timing and we all agree that now is the right time to make the transition to a new CEO who can take the company to the next level," says chairman Roy Bostock, who will lead the recruitment of a new CEO in consultation with Yang. The board, which has retained executive search firm Heidrick & Struggles as an advisor, will consider both internal and external candidates for the position. Yang will remain on Yahoo!'s board after stepping down.

Yang first came under shareholder pressure in May after he rejected a USD47bn takeover offer from Microsoft. A proxy fight by billionaire shareholder Carl Icahn to replace Yang was settled in July with the election of Icahn and two of his nominees to the Yahoo! board. However, Yahoo!'s shares began to plummet, losing as much as 44% of their value in the past 90 days.Yang tried to revive Microsoft's interest in recent weeks but the software firm denied any interest in a new bid.

"We have created a more open, competitive Yahoo! and we believe the time is now right to transition to a new CEO who can take the company to the next level," says Yang in an internal memo. "I strongly believe that having transformed our platform and better aligned costs and revenues, we have a unique window for the right CEO to take ownership over the next wave of mission-critical decisions facing the company."

Meanwhile, Yahoo! is engaged in merger talks with Time Warner's portal AOL. The deal, which would see Yahoo! acquire AOL's content, services and advertising businesses, is designed to help Yahoo! gain ground on Google, which steadily strengthened its lead in the past few years.