Yahoo! Says Severance Plan Unlikely to Cost $2.4 Billion
In a series of letters, Carl Icahn has been giving Yahoo’s Board of Directors a hard time about a severance plan that would be enacted if a “Change of Control” occurred at the company. He claims the plan would would cost $2.4 billion, making an acquisition or change of board of directors very costly.
But Yahoo has filed an FAQ with the SEC defending the severance plan and attempting to explain why the $2.4 billion number is unreliable.
And what about the “poison pill” characterization by Icahn? Here’s what the FAQ had to say about that:
The term “poison pill” is widely understood to refer to stockholder rights plans which work by allowing existing stockholders (except the acquiror) to buy more shares at a substantial discount to the then current share price of the target if the acquiror purchases above a specified level of stock of the target (usually 15%) without the consent of the target’s board. As a result, this substantially dilutes the acquiror’s holdings and makes the acquisition much more expensive. The Plan, which is designed to preserve the value of Yahoo! during a period of uncertainty, has no such purpose or effect.
What do you think of Yahoo’s FAQ? Are they really looking out for their employees or are they trying to prevent an acquisition or a proxy board takeover? Sound off in the comments!