Yahoo fires broadside at Icahn

Yahoo Inc, facing an attempt by Carl Icahn to oust its board, fired back at the billionaire investor after he said an employee-retention plan had helped thwart a $47.5 billion acquisition by Microsoft Corp.

The employee program is designed to attract and keep the best workers, enhancing shareholder value, Yahoo Chairman Roy Bostock said in an eight-paragraph letter to Icahn. The investor's claim that the program is a so-called poison pill "could not be further from the truth", he said.

"The plan was adopted in order to protect the value of Yahoo in anticipation of a possible acquisition by Microsoft, which would have resulted in a lengthy regulatory review and a significant period of uncertainty for our employees," Bostock said. "In adopting this plan, we believe Yahoo did the right thing for its employees and its shareholders alike."

Icahn called for the dismissal of Yahoo Chief Executive Officer Jerry Yang, saying he had sabotaged Microsoft's efforts to buy the Internet company. Combining with Microsoft is the only way Yahoo can become a "true competitor" to Google Inc, he said. Yahoo ranks a distant second to Google in the Internet search market.

Bostock said Yahoo has met with Microsoft many times in the past weeks and that the board is open to any deal. Microsoft says it's no longer interested in a full acquisition of Yahoo, even though the Internet company has reached out "proactively" to its former suitor, Bostock wrote in the letter.

Icahn, 72, didn't immediately respond to a message left at his office after business hours yesterday. Yahoo spokesman Brad Williams said the letter speaks for itself.

'Just plain wrong'

Yahoo rose 70 cents, or 2.7 percent, to $26.85 on Wednesday in NASDAQ Stock Market trading. Redmond, Washington-based Microsoft, the world's largest software maker, rose 23 cents to $27.54.

Icahn urged Yahoo to get rid of the employee plan, saying it would free up as much as $2.4 billion. He said the program gives Yahoo's full-time employees the right to quit with severance if the purchase leads to a "substantive adverse alteration" in job duties or responsibilities.

Yahoo said Icahn's assessment of the plan is "just plain wrong". In order for employees to receive severance payments, the company would need to be bought and workers would need to be fired "without cause" or resign for "good reason", Yahoo said. Employees who simply quit would get nothing, the company said.

Bostock also said Icahn misrepresented Yahoo's dealings with Microsoft, saying the investor relied on allegations in a lawsuit filed in Delaware Chancery Court.

"You accuse us of turning down a $40 per-share offer and 'sabotaging' a $33 per-share offer. Again, this is patently untrue," Bostock wrote.

Agencies

(China Daily 06/06/2008 page16)