NEW YORK (Reuters) - Billionaire investor Carl Icahn would seek to remove Jerry Yang as chief executive of Yahoo Inc if Icahn succeeded in a proxy battle against the company over its failure to reach a deal with Microsoft Corp, The Wall Street Journal reported on Tuesday.

Icahn has proposed an alternate slate of directors for Yahoo's board, but has yet to directly target Yang over the breakdown in talks early this month for a $47.5 billion deal.

"It's no longer a mystery to me why Microsoft's offer isn't around," the Journal quoted Icahn as saying. "How can Yahoo keep saying they're willing to negotiate and sell the company on the one hand, while at the same time they're completely sabotaging the process without telling anyone?"

Icahn cited details from court documents related to a shareholder suit that were unsealed on Monday. The documents showed how Yahoo had taken steps to rebuff a Microsoft takeover bid months before the software maker made its offer public on February 1.

The shareholder lawsuit argued that Yahoo had taken aggressive steps to block a deal, including the adoption of a costly plan to retain employees, leading up to a breakdown in negotiations.

The Journal said Yahoo's board was due to meet on Tuesday. Icahn and Yahoo officials were not immediately available.

Yahoo shares were down 35 cents or 1.3 percent to $26.05 on the Nasdaq.

(Reporting by Michele Gershberg; editing by John Wallace)

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