Yahoo Chairman Roy Bostock has rejected charges by shareholder Carl Icahn that an employee retention package was designed to discourage a Microsoft takeover.
"To set the record straight, the employee retention program is designed to protect the Company's assets and value during a time of uncertainty. The claim that the plan gives each of Yahoo!'s employees 'the right to quit his or her job and pocket generous termination benefits at any time during the two years following a takeover...' is just plain wrong," Bostock wrote on Wednesday night.
Yahoo adopted a new employee severance package after Microsoft announced its $44.6 billion (£22.8 billion) hostile takeover bid on February 1, 2008. The package would have cost Microsoft up to an additional $2 billion, offering employees terminated or who resigned for "good reason" four months' to two years' severance pay depending on their position. Icahn saw the move as a "poison pill" - usually a corporate manoeuvre designed to stave off a hostile takeover.
"In fact, 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 wrote.
Bostock then fired a new salvo in the war of words between the Yahoo! board and Icahn, who charges that the board hurt shareholders by not accepting the Microsoft acquisition offer. "Conspicuously absent from your letter is any credible plan for Yahoo! other than a repetition of your insistence that the Company should sell itself to Microsoft. Indeed, your stated view that 'the only way to salvage Yahoo! in the long if not short run is to merge with Microsoft demonstrates that you have no other plan and causes one to wonder what exactly would happen to our Company if you and your nominees were to take control of Yahoo!," he wrote.
Icahn seeks to oust Bostock, along with CEO Jerry Yang and other board members, and replace them with his own slate of directors.
"I have constantly complained about how far CEOs and boards will go in order to retain their jobs, yet even I am amazed at the length Jerry Yang and the Yahoo board have gone to in order to entrench their positions and keep shareholders from deciding if they wished to sell to Microsoft," Icahn wrote in his letter to Bostock.
Microsoft walked away from its acquisition attempt in early May, after three months of negotiations to buy the internet company. Since then, Icahn and other disgruntled shareholders have sought various means of redress, accusing Yang, Bostock, and the board of not protecting their interests.