Yahoo’s shareholders drag it to court as Icahn showdown looms
By Erna Mahyuni
Yahoo’s shareholders look set to drag Yahoo to court over an employee severance plan. It’s all part of what looks like a huge battle over Yahoo’s future, with billionaire Carl Icahn set to attempt to force Yahoo into accepting a Microsoft deal.
AP reported on the drama over an employee severance package. There is the issue of the timing of said package - it came right after Microsoft’s initial bid of $44.6 billion. Shareholders are challenging the legality of the seeming response to Microsoft’s bid, though it’s yet to be seen if a Delaware judge grants the request to bring the matter to trial.
The severance plan is an important focus of the Icahn-Yahoo battle, as the plan could trigger payments and benefits totaling more than $2 billion. Of course, that is in the event Yahoo employees are fired or quit after being reassigned within two years of a takeover.
This is no small matter in light of the coming August 1 election, where Yahoo’s current board will face a tough battle against Icahn and eight others nominated by him for board posts.
Boston University professor James Post said that a trial “would force Yahoo’s board and senior executives to answer a lot of questions that they probably don’t want to answer right now.” Post specializes in corporate governance and business ethics. “The last thing they want to do is to expose any more information about this severance program or anything else that Icahn could use.”
The severance plan could also prove a huge roadblock in Icahn’s ultimate plan to broker a sale. What makes the plan even more contentious is the stipulations attached - that the board itself will have no power to challenge or rescind it till 2010. Billed anti-takeover devices or “dead hand poison pills”, the plan could ultimately end up being invalidated by Delaware courts who have done so to similar plans in the past. Yahoo insists that the plan is no poison pill but instead of means of retaining and attracting talented employees:
“We believe retaining valued (employees) would be consistent with any acquirer’s goals,” Yahoo wrote on a Web site for employees.
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