Earlier this month, I wondered What Will Shareholders Think of Yahoo's Sweet Severance Deal?
They thought so little of it, in fact, that they filed a lawsuit seeking to have the controversial severance plan invalidated prior to the forthcoming Aug. 1 shareholders meeting. The two Detroit pension funds that filed the suit claimed that any change in ownership or control of the board -- a definite risk, thanks to the mercurial Carl Icahn -- could potentially cost shareholders lots of money.
The severance plan, engineered by Yahoo CEO Jerry Yang, would guarantee a mix of cash and stock payments to all of Yahoo's 13,800 employees if they were fired or chose to quit after being reassigned to a different job within two years of a Microsoft purchase. At Microsoft's bid of $31 a share for Yahoo, this could add up to $2.1 billion to the acquisition costs.
Icahn himself doesn't think much of the severance plan. If he is successful in his bid to gain control of Yahoo, Icahn says he will jettison it. He also wants to replace Yang.
Unfortunately for Yahoo shareholders, a Delaware judge ruled that neither the severance plan nor Yahoo's recent search advertising deal with Google justifies the expedited trial the shareholders are seeking.
In addition, according to a News.com blog post, the judge signaled that he's open to hearing on Yahoo's motion to dismiss the shareholders' suit before the meeting.
At least one Yahoo shareholder, Eric Jackson, wants to make nice with Icahn and has proposed reconfiguring the board with five directors from the company and four folks chosen by Icahn, as IT Business Edge noted in a blog yesterday. With all of the drama, no one seems to know whether Microsoft still even has any interest in acquiring all or part of Yahoo.