Yahoo CEO Jerry Yang and his company’s board are facing what might be their most important deadline.

Microsoft Corp. has vowed to take the next step in its three-month merger fight for the Sunnyvale Web portal if it fails to have an acquisition agreement on the table by today.

What Microsoft will do if Yahoo, as expected, continues to play hard to get, isn’t entirely clear. Microsoft executives have laid out several options, one of which they’ve promised to choose next week.

The threat is intended to pressure Yahoo into accepting the blockbuster offer, which promises to reshape the Internet landscape by combining two technology titans. But Yahoo has been anything but willing after repeatedly rejecting its suitor, describing the offer - initially valued at $44.6 billion - as substantially undervaluing the company.

The high-profile standoff is the topic du jour among the digerati and investor crowds. All are waiting for the next installment in the saga, which has been punctuated by corporate gamesmanship and dueling celebrity CEOs.

One scenario for Microsoft is to take its merger proposal hostile by asking shareholders to approve a more merger-friendly slate of directors. Microsoft would be gambling that shareholders would agree that its offer, which initially put a 62 percent premium on Yahoo’s stock, is more lucrative than what Yahoo could offer as a stand-alone company.

But the tactic, called a proxy contest, has its risks because many employees could flee amid the inevitable mudslinging. An exodus would reduce the value of Yahoo to Microsoft, which would therefore prefer a friendly merger.

More recently, Microsoft’s executives have talked up the possibility of dropping their offer and focusing on building their existing Web business. A common negotiating tactic, it nevertheless ratchets up the pressure on Yahoo’s board to reach a deal because the company’s shares would subsequently sink, according to analysts.

Most analysts are still betting on Microsoft prevailing with its takeover bid. Although Microsoft won’t say it publicly, analysts generally agree that the company will end up sweetening its bid to get the deal done.

“Whatever Microsoft does, the deal will happen,” said Chris Le Tocq, an analyst with Guernsey Research. “I think that the worm is firmly on the hook here.”

Yahoo shares closed Friday down 50 cents to $26.80. Microsoft shares dropped $1.97 to $29.83.

E-mail Verne Kopytoff at vkopytoff@sfchronicle.com.

POLICE yesterday appealed for information over a series of violent robberies which they believe are linked.

The teenage victims were subjected to a “terrifying” ordeal, according to officers.

A ball-bearing gun was used in one of the three attacks in Glasgow’s south side in the past month, which police today branded “despicable”.

The victims were aged between 13 and 18 and Detective Sergeant Fil Capaldi yesterday appealed for witnesses.

“The boys who have been robbed have been subjected to a terrifying ordeal and we take very seriously incidents involving weapons,” he said.

“The actions of those involved have been nothing short of despicable and I would appeal to anyone who knows the people involved, or who have any information regarding their identity, to contact me at Cathcart CID.”

(04-26) 04:00 PDT Los Angeles — - Turmoil in the housing market forced Countrywide Financial Corp. CEO Angelo Mozilo to take a sharp pay cut in his compensation package last year: $22.1 million, or barely half of the $43 million he was paid in 2006.

But Mozilo should still get along OK, since the pay package was a just fraction of the $121.5 million in stock options he cashed out in 2007, a year Countrywide posted a loss of more than $700 million and saw its stock fall 80 percent from its peak.

Mozilo, 70, was paid a salary of $1.9 million in 2007, according to a preliminary filing with the Securities and Exchange Commission on Thursday.

The Calabasas (Los Angeles County) mortgage company said Mozilo did not receive a bonus or non-equity-incentive-plan compensation, which was pegged to specific performance targets Mozilo failed to meet. Still, he received stock and option awards that had an estimated value of about $20 million when granted. He also got other compensation valued at $176,513, including $44,454 for personal use of company aircraft, $31,238 to pay for tax and investment advice, $23,755 for a car allowance and $48,377 for charitable contributions.

In addition, Mozilo received preferential earnings on deferred compensation totaling $42,298, according to the filing.

The Associated Press calculations of total pay include executives’ salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year.

The calculations don’t include changes in the present value of pension benefits, and they sometimes differ from the totals companies list in the summary compensation table of proxy statements filed with the SEC.

All told, Mozilo’s executive compensation package totaled $22,118,887, down nearly 49 percent from $42,994,306 in 2006.

The decline in pay reflects the sharp downturn that rocked Countrywide and other mortgage lenders last year as the housing bubble burst, leading to a spike in mortgage defaults that ended up choking credit across financial markets.

For 2007, the lender posted a loss of $704 million versus a profit of $2.7 billion in 2006. Revenue last year plunged 47 percent to $6.1 billion.

The company’s stock also nose-dived, falling 80 percent by the end of 2007 from its five-year peak of $45.03 in February of that year.

Shares in Countrywide, which agreed in January to be acquired by Bank of America Corp. for $4.1 billion in stock, closed Friday up 6 cents, or 1 percent, to $5.84.

The SEC has been scrutinizing the timing of Mozilo’s stock sales. Mozilo has said he’s cooperating with the inquiry and has denied making any improper trades.