Yahoo Chairman Roy Bostock is stepping down in response to continued shareholder frustration with his performance, as Yahoo’s fortunes have slipped in comparison to those of Google (News - Alert). Many top analysts agreed with the move. “It was time for him to leave the scene,” said Sameet Sinha, a B.Riley & Co. analyst.

Ryan Jacob, a portfolio manager for Jacob Asset Management, echoed Sinha’s sentiment. “These changes are long overdue. It had gotten to the point where the board really didn’t have any other choice. I think everyone needed a clean break.” Jacob’s company owns 140,000 shares of Yahoo stock.

Shareholders blamed Bostock and Yahoo co-founder Jerry Yang, who stepped down in January, for missing the opportunity to sell the company to Microsoft (News - Alert) for $33 per share. Since that time, Yahoo stock has not traded over $20 per share; yesterday, the stock leveled at $15.63 per share. Yahoo has hired Scott Thompson, a former PayPal (News - Alert) executive, in an effort to reverse its declining fortunes. Thompson will be Yahoo’s fourth CEO in less than five years.

Three other board members will also not be seeking reelection, leaving Yahoo with just seven board members. The departing board members are Vyomesh Joshi, Arthur Kern and Gary Wilson. In a gracious parting note, Bostock wrote that bringing in new directors to work with Thompson would “provide Yahoo with the expertise and perspectives necessary to drive innovation and growth.”

Bostock’s departure will potentially avert what some have called a “shareholder mutiny.” Daniel Loeb, a hedge fund manager with a 5.2 percent stake in Yahoo, sent a scathing letter to Yang and Bostock last year, telling them that they should step aside. Loeb has also threatened to nominate a new slate of directors if Yahoo does not overhaul its board. If Loeb intends to follow through on his threat, the window for nominations will open February 24.

The upcoming Facebook (News - Alert) IPO has trained the spotlight squarely on Yahoo’s underperformance. Facebook’s revenue grew 88 percent last year, while Yahoo’s declined 20 percent during the same span. The social networking powerhouse will surpass Yahoo’s revenue this year if the same trends continue. Facebook surpassed Yahoo in 2010 as the Internet’s most visited website.

To generate some cash, Yahoo is trying to sell both Yahoo Japan and its shares in the Alibaba Group. Negotiations for the sale have dragged on since last fall, and Bostock’s departing letter indicated no further details or assurance that the transaction would happen.

Analysts have expressed some concern with the choice of Thompson as CEO because he has never worked with a company like Yahoo. Thompson has, however, worked for Inovant, a Visa subsidiary, which may mean he could put together a better package for a possible Yahoo sale. Google, Microsoft and Alibaba have all expressed interest in purchasing the troubled Internet content provider.

Hopefully, Thompson’s tenure will have a better ending than that of previous CEO Carol Bartz (News - Alert). She was fired in an email, not in person, and has publicly called the Yahoo board “doofuses.”