Yahoo!, Icahn continue to spar over 'poison pill severance plan,' Microsoft merger

By Lisa Kerner

Charlotte, N.C., June 6 - Yahoo! Inc. said it disagrees with Carl Icahn's suggestion that the company cancel its retention plan, claiming that doing so would have a destabilizing impact on the company. It's also not in the shareholders' best interests, according to a Yahoo! news release.

Icahn lacks a credible plan to operate the company should he oust chief executive officer Jerry Yang and the company's current board as planned, Yahoo! said.

Yahoo! called Icahn's suggestion that the company "put out a price publicly to see if Microsoft will alter its stated position" ill-advised.

In a June 4 letter to Yahoo! chairman Roy Bostock, Icahn said replacing Yang and the board is the best chance to bring Microsoft Corp. and Yahoo! together.

The activist investor cited a complaint filed against Yahoo! that accuses Yang of engineering a plan that would allow Yahoo! employees to quit their jobs at any time following a takeover and "pocket generous termination benefits."

Ichan suggested Yahoo! rescind the "poison pill severance plan" to free up $2.4 billion or more that could be added to a new Microsoft bid for the company.

In his latest June 6 letter to Bostock, Icahn said he believes the severance plan will negatively impact employee behavior and "degrade the ability of an acquirer to successfully integrate the acquisition."

"In the event of a change of control, the employee may decide not to work as hard in the hopes of cashing in on a robust severance package that awards up to two years salary and benefits, $15,000 of outplacement expenses, and accelerated vesting of stock options and restricted stock units," Icahn said in his letter.

Icahn told Bostock he does have a plan for Yahoo! and it includes:

• Replacing the severance plan with an "acceptable alternative";

• Hiring a "talented and experienced" CEO; and

• Asking the new board to inform Microsoft that unless any alternative transaction can ensure a $33 or higher stock price, all talks of alternative transactions are over.

In addition, Icahn said he would ask the new board to offer publicly to sell Yahoo! to Microsoft in "a friendly and cooperative transaction."

If Microsoft is not interested in making a proposal, Icahn would ask the new board to do a search deal with Google that would not impede a subsequent acquisition by Microsoft.

According to Icahn, Yahoo! previously denied shareholders the opportunity to sell to Microsoft at $40 per share in January 2007 and at $31 per share in January 2008, in addition to sabotaging a $33-per-share offer, the letter stated.

It was previously announced that Yahoo! would hold its annual meeting of stockholders on Aug. 1.

Yahoo! shareholders will be asked to elect nine directors to serve until the 2009 annual meeting or until their respective successors are elected and qualified.

Icahn nominated a slate of nine candidates plus himself for election to the Sunnyvale, Calif., internet services provider's board.

The Federal Trade Commission recently granted early termination of antitrust reviews in Icahn's bid to purchase up to $2.5 billion of Yahoo! stock, a government release said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.