AOL Inc. (NYSE:AOL) CEO Tim Armstrong has been meeting with top shareholders to push the idea of a sale to Yahoo (NASDAQ:YHOO) sale, according to reports. The scheme allegedly would allow the AOL and Yahoo partnership to stop competing against each other and start dominating digital publishing.

But AOL shareholders shouldn’t be fooled. This is just the latest boondoggle from AOL’s inept CEO Armstrong, a quick-fix meant to prove that he has accomplished something in his tenure in the corner office — or at least provide a smokescreen so he can make a quick getaway.

Yahoo isn’t a target because AOL is trying to grow a business long-term. It’s a target to cover up Tim Armstrong’s mistakes.

Take it right from the words of an inside source, quoted in The New York Times recently:

“As far as Armstrong’s desire for an exit, he doesn’t want to be doing what he is doing 18 months from now. He wants to be out,” said a source familiar with Armstrong’s thinking. “He’s an ambitious sort of guy and AOL is such an afterthought. But he would definitely put his hat in the ring to run a combined Yahoo/AOL.”

Who the heck cares what Armstrong wants? Is AOL his personal plaything, or a publicly traded company with a clear obligation to its shareholders? If he’s such an ambitious fellow, Armstrong should have something to show for his tenure at the company.

Armstrong took over AOL in March 2009, and it has been ugly ever since. The stock was spun off from Time Warner (NYSE:TWX) in 2010 and is off 40% since then while the broader stock market is up by double digits. Armstrong was supposed to be a heavy hitter, snatched away from Google (NASDAQ:GOOG) for his online advertising savvy, and AOL had hoped he would breathe new life into the struggling media company.

Not so much. AOL’s revenue dropped by 25% from fiscal 2009 to fiscal 2010. The company has seen 10 straight quarterly reports with year-over-year revenue declines — the most recent being a surprise quarterly loss in August.

The culprit a few months ago? Weaker-than-expected advertising growth. In fact, operating income for the year could be down as much as 20% because of weaker ad sales.

To be fair, not all the blame can be laid on Armstrong. He was brought into a company that was rapidly losing revenue from its dial-up Internet access business and charged with plotting a new way forward with an ad-supported business. Some of the revenue bottlenecks would exist even if ad sales were booming.

But they are not — and that’s the most disturbing thing of all. The decline of AOL dial-up access is inevitable, and in the absence of a coherent strategy to provide another revenue stream, the decline of AOL is inevitable, too.

Armstrong claims an AOL partnership with Yahoo could produce more than $1 billion in cost savings for the combined companies, according to sources. But that’s wishful thinking. After flailing around with an in-house editorial strategy, AOL simply threw up its hands and bought out Huffington Post for $315 million earlier this year — admitting defeat and hoping someone else could fix the problem. This Yahoo buyout would be another version of that — an admission that AOL can’t compete for eyeballs on Facebook and Google and Yahoo, so it would rather just throw money at the problem.

That’s not fair to shareholders. And it’s just an easy out for Armstrong — a way for him to try to save face for his very unsuccessful run at the helm of AOL.

For the record, I don’t have any venom towards Mr. Armstrong. His job can’t be easy, and working in digital publishing, I know first-hand the challenges of building out a quality website that meets the needs of both readers and advertisers alike.

But based on SEC filings, his original compensation deal equates to a $1 million base salary, cash bonuses up to $4 million, and staggering awards of $10 million worth of Time Warner equity in 2009 and 2010 before the spinoff. That’s to say nothing of his current AOL stock options — which are surely mighty plush even after the sharp decline since 2010.

He gets paid good money to fix this mess. And to anyone at AOL who’s reading, I would be happy to give it a shot. If the standard is to continue losing money and seeing shares decline, I’m pretty sure I could perform just as well for half the pay.

In all seriousness, InvestorPlace.com contributor Jonathan Berr — a former AOLer himself — might have had the best idea of all when he suggested taking AOL private. There have been hints that AOL might be taking his advice, but this Yahoo plan would fly in the face of any effort to buy up AOL and take it off the market and away from shareholder scrutiny. If anything, it would only expose AOL to more Wall Street criticism.

A Yahoo-AOL partnership is ill-advised, and simply window dressing for Tim Armstrong. Shareholders should not allow AOL to become just a pawn in the game to assuage his ego.

But take heart, AOL stockholders. The original Tim Armstrong contract only runs until April 7, 2012. Just hold your nose until then.

Jeff Reeves is editor of InvestorPlace.com. As of this writing, he did not own a position in any of the stocks named here. Follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook.