According to a regulatory filing that was made to settle a shareholder lawsuit, Yahoo overhauled a severance program it passed earlier this year to thwart an unsolicited buyout bid by Microsoft.
The plan promised generous cash and stock benefits to virtually all of Yahoo’s nearly 14,000 employees if they were fired, took a pay cut or resigned after being involuntarily reassigned to another job within two years of a takeover.
The sweeping coverage would have cost Microsoft an additional $462 million to $2.1 billion had the software maker been able to buy Yahoo at its initial offer of $44.6 billion, or $31 per share, according to internal Yahoo documents turned over during the shareholder case in Delaware court.
Yahoo agreed to revisions that will make it more difficult for employees to qualify for severance pay after a takeover. The changes also limit the eligibility period to the first year following a sale and allows the board to scrap the plan entirely an option that wasn’t available under the original terms.
The revisions also specify the severance packages won’t be available if Yahoo decides to sell its search operations to Microsoft.
A major shareholder of Yahoo, Ivory Investment Management, which owns a 1.5%, concluded that selling the search engine could boost Yahoo’s profit and lift the company’s stock price to $24 to $29 per share.
Yahoo shares gained $1.21, or nearly 10 percent, to finish Wednesday at $13.40.
The company’s revisions to the severance plan take effect immediately, but will expire in 90 days if the lawsuit settlement isn’t approved by then.
Today also marked the day that Yahoo started handing out the pink slips to some of the 1,500 employees it announced a couple of months ago.
Yahoo confuses me… Are they not supposed to act in the best interests of their shareholders?
Seems they stopped doing that about 9 years ago.
Interesting post – what a news
I’m still baffled they didn’t take the MSFT offer — not just in hindsight, was saying that even at the time. Really made no sense not to take it.
it just shows Jerry Yang was more corrupt than inept.
Reece I agree and there is a parallel between the yahoo story and many many domainers…example: offer, xxx for your domain…no, I want xx,xxx, this is a valuable brandable domain…crickets…hey where did you go?
Tim
Except Rick would have asked for xxx,xxx for the domain and gotten it
We should expect a sale of Yahoo’s search business soon. The changes to the severance plan have conveniently addressed exactly such a situation i.e a sale of Yahoo’s search business. Yahoo has managed to kill 2 birds with one stone- settle a pending lawsuit as well as make itself more attractive to a potential offer.
Blame the Yahoo shareholders, they got exactly what they voted for–they put Yang in with over 80% of the vote earlier in the year.