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June 11, 2008
Yahoo may Face Early Shareholder Trial
San
Francisco
Internet pioneer Yahoo may have to face a lawsuit by insurgent
shareholders before a key Aug 1 vote in which the company's board
faces re-election, according to court papers released Tuesday.
The activist investors led by Carl Icahn filed a lawsuit against
Yahoo, charging that it introduced an illegal employee severance
plan that could have tacked an estimated $2.4 billion in costs to
Microsoft's $47.5 billion takeover bid. Microsoft withdrew the offer
on May 3.
Icahn is proposing an alternate slate of directors, claiming that
under Yahoo founder and CEO Jerry Yang had sabotaged a deal that had
clearly been in the best interests of shareholders. He aims to oust
Yang and sell the company to Microsoft.
In the court papers filed late Monday night to a judge in Delaware,
shareholder attorneys argued that the legality of the severance plan
should be determined before the proxy shareholder vote. Otherwise,
the lawsuit claimed, shareholders would be forced to vote for the
current directors because ousting them would constitute a takeover
that would trigger the costly severance plan. "A July trial on the
validity of the Severance Plans is imperative for Yahoo
shareholders," the motion read.
Yahoo is expected to vigorously oppose a call for a quick trial. In
an SEC filing it defended the severance plan as a way to prevent
employees leaving in advance of an ownership switch. The company
also said that the cost of the plan would be much less than that
claimed by Icahn. "The total payout would be $845 million or $514
million , assuming that 30 percent or 15 percent of the employees,
respectively, are terminated without cause or leave for good reason
following a change in control," said the company.
DPA
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June 11, 2008
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