Papers detail Yahoo efforts to avoid sale

From the Associated Press

Yahoo Inc. Chief Executive Jerry Yang pushed for an employee severance program that made it more expensive for Microsoft Corp. to engineer a takeover even after an outside consultant questioned the plan’s generous benefits, according to previously sealed documents in a shareholder lawsuit against Yahoo.

The details about the severance program and other information about Yahoo’s efforts to thwart Microsoft’s takeover bid became available Monday after a Delaware judge released redacted portions of a shareholder complaint filed last month after Microsoft withdrew an oral offer to buy Yahoo for $47.5 billion, or $33 a share.

Based on Yahoo’s internal estimates, the severance plan would have added $462 million to $2.1 billion to Microsoft’s costs, based on the software maker’s initial Jan. 31 offer of $44.6 billion, or $31 a share.

If the bid had been raised to $35 a share, Microsoft’s potential costs from the severance program changes would have ranged from $514 million to $2.4 billion, according to the estimates.


The severance program, adopted Feb. 12, guaranteed a mix of cash and stock payments to all 13,800 Yahoo employees if they either quit or were fired after being reassigned to a new job within two years after a Microsoft takeover.

The program’s costs -- and how they might have discouraged Microsoft from raising its bid above $47.5 billion -- could become fodder in a shareholder mutiny that activist investor Carl Icahn is leading against Yahoo’s board.

Spurred by shareholders upset at Yahoo’s board’s handling of the bid, Icahn has filed a plan to replace the current directors unless the takeover talks are revived before Yahoo’s annual meeting in late July.

Microsoft hasn’t ruled out making another takeover attempt, although its recent talks with Yahoo have been limited to a business deal involving Yahoo’s online search operations.

The battle with Icahn is one reason that Yahoo sought to keep much of the shareholder suit -- including the documents released Monday -- under seal.

Yahoo is disappointed with the judge’s decision to unseal the records but remains confident that the suit’s allegations are without merit, company spokesman Brad Williams said.