Icahn Begins Work on Next Irate Yahoo Memo
Shareholders suing Yahoo’s (YHOO) board of directors for its alleged mishandling of the Microsoft (MSFT) buyout offer may find their efforts to pull the company’s controversial severance plan something of a fool’s errand. Because according to a new company filing, their chances of forcing Yahoo to scrap the plan are about as good as their chances of forcing CEO Jerry Yang to use capital letters in his all-hands memos, just like a big boy. Which is to say, middling to lousy at best.
In an SEC filing late today, the company noted that it cannot simply terminate the severance plan, as some shareholders, and one in particular, would like. From Yahoo’s filing:
Can the board simply terminate or cancel the plan now as suggested by Mr. Icahn?
No. Under the terms of the plan, it cannot be terminated once a person has publicly announced the intention to take an action, which if consummated, would constitute a change in control until one month following the abandonment of the potential change in control. The actions covered include, among others, the announcement by any person of an intention to acquire the company as well as a proxy contest to take over a majority or more of the board (such as that announced by Mr. Icahn). Accordingly, the plan can’t currently be terminated or canceled. The plan can be terminated one month following the abandonment of the actions creating a potential change in control.”
Suffice to say, the litigious among Yahoo’s shareholders are not at all pleased with this particular feature of the plan and have filed a motion requesting a trial to remove it before Yahoo’s annual meeting in August. “A prompt trial on the validity of the severance plans is now essential and appropriate,” they argued in a brief filed today, “not least because Yahoo’s board disabled itself from rescinding the severance plans during the pendency of a proxy fight, even if doing so is essential to realizing a favorable deal, and because Icahn’s slate is barred from rescinding the severance plans if it prevails in its proxy contest.”