Icahn’s Win Would Launch Severance Plan

Yahoo distributed a letter to employees yesterday defending a retention plan that has been criticized by billionaire activist shareholder Carl Icahn, who is agitating to replace the board and cofounder and CEO Jerry Yang.

Icahn has charged that Yahoo implemented the plan to thwart an acquisition. A shareholder group has filed suit against Yahoo to strike down the plan, asserting that it would deter potential acquirers.

Yahoo implemented the preemptive severance payment for some employees after turning down a bid by Microsoft in May. The plan would cover employees who are terminated or leave under circumstances warranted by a change of control. Icahn has estimated that the plan would cost $2.4 billion. Yahoo wrote in its letter tthat the actual estimates put the costs at $514 million or $845 million instead.

Microsoft has not commented on whether it plans on bidding on Yahoo again after withdrawing its $47.5 billion bid on May 3, according to The Wall Street Journal. The computer giant's
silence has left Icahn to pursue his case with a campaign against Yahoo’s current board to replace current CEO Jerry Yang with a new, “talented and experienced CEO.”