Yahoo Shareholders Want Severance Plan Struck Down; Claim Invalid Under Delaware Law
By Joseph Weisenthal - Tue 10 Jun 2008 11:30 AM PST
As Carl Icahn has honed in on Yahoo’s (NSDQ: YHOO) severance plan as a key vulnerability, so too have the shareholders suing the company. In a motion filed yesterday (.pdf, via InfoWorld), the same Detroit pension fund that’s been going after the company demanded a trial be held on the validity of the severance plan. Because Yahoo made it difficult to revoke, says the brief, the plan is “in this respect, conceptually similar to an unredeemable dead hand poison pill, an entrenchment device invalid under Delaware law.”
A few things to consider here: As much as this has become a point of controversy, it’s not obvious that it’s been critical in blocking a deal. Also, even Icahn contends that the Yahoo board is now in position to revoke the plan, if it chooses to do so, as he noted in a letter last week: “The board can rescind the “severance plan” that is the largest impediment to a Microsoft (NSDQ: MSFT) deal. You currently can do this because Microsoft withdrew their bid 30 days ago.” And for its part, Yahoo has denied that the severance plan is a poison pill, arguing that the basis for qualifying for the severance payment is suitably high.
Posted in: Companies, Microsoft, Yahoo, Legal, VC+M&A, Mergers & Acquisitions
