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Yahoo: Severance Plan Not ‘Nuts’; Not Easily Revoked; And It Wouldn’t Cost Microsoft $2.4 Billion

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Following the latest twist in the shareholder lawsuit against Yahoo (NSDQ: YHOO), and Carl Icahn’s continued jabs, Yahoo has filed an FAQ with the SEC, detailing everything you wanted to know about its controversial severance plan but were afraid to ask. Ever since a judge unsealed information on it last week, this has become the focal issue in this whole affair. Among the key points: The Yahoo board can’t just revoke the plan, as Icahn has demanded. See, the rule is that the board can drop the plan 30 days after an action has ended (eg Microsoft (NSDQ: MSFT) abandoning its bid for Yahoo). The problem is that there’s a new action on the table, and it’s Icahn’s. Now that he’s trying to wrest away board control, the company is once again hamstrung by its own rules (this is what’s driving shareholders crazy, and why they’re hoping that the whole thing gets declared invalid.) Some other highlights after the jump:

Mr. Icahn says this Plan costs $2.4 billion. Is that what it actually costs? No. An estimate of the amount, if any, payable under the Plan requires making assumptions about unknown facts and variables including: (1) the number of employees who terminate employment without Cause or for Good Reason within the two years following any Change in Control, (2) each such employee