SAN FRANCISCO — Dissident investor Carl Icahn escalated his attacks on Yahoo’s beleaguered board Wednesday in an acerbic letter demanding that the directors scrap an employee-severance plan that drove up the potential costs of a Microsoft takeover.
If Yahoo’s board clings to the severance plan, Icahn indicated he will follow through on his 3-week-old threat to ask shareholders to fire the board at the Sunnyvale-based company’s Aug. 1 annual meeting.
That move would also target Yahoo chief executive Jerry Yang, who co- founded the Internet pioneer 14 years ago and pushed for the adoption of the severance program. The plan could trigger $464 million to $2.4 billion in employee payments if Microsoft pulled off a successful takeover at a price ranging from $31 to $35 per share.
Those estimates were drawn from internal Yahoo records unsealed Monday in a shareholder lawsuit alleging that Yang and the company’s board improperly spurned Microsoft ever since the software maker made its first overtures in August 2006.
Microsoft CEO Steve Ball mer withdrew an oral offer to buy Yahoo for $47.5 billion, or $33 per share, a month ago after Yang asked for $37 per share — a price that the company’s stock hasn’t reached since early 2006.
“One doesn’t have to be a rocket scientist to realize there is a simple method” for luring another offer from Microsoft, Icahn wrote in the letter, which was addressed to Yahoo chairman Roy Bostock. “Simply rescind the … ‘severance plan,’ which would free up approximately $2.4 billion and possibly even more, which could be added to the bid.”
Although it hasn’t ruled out the possibility of reviving its bid, Microsoft in recent weeks has been exploring a deal focused on Yahoo’s search operation. Yahoo president Susan Decker told an advertising conference Wednesday that the two sides remain in “active” discussions, though she didn’t provide details.
Microsoft representatives didn’t immediately respond to requests for comment Wednesday.
Hoping Microsoft will bid again for Yahoo, Icahn has spent more than $1 billion to acquire a 4.3 percent stake in Yahoo.
Similar severance plans have been adopted by other companies trying to ward off unwelcome advances, said Dennis Carey, senior client partner for Korn/Ferry International, which helps companies find top executives.
Icahn derided the severance plan as a deliberate attempt to sabotage the Microsoft bid.
“Until now I naively believed that self-destructive doomsday machines were fictional devices found only in James Bond movies,” Icahn wrote. “I never believed that anyone would actually create and activate one in real life.”
