Yahoo wasn't too thrilled about Carl Icahn's recent allegations that they hadn't taken the Microsoft acquisition offer seriously. So they're attempting to clear things up with their latest response letter.
Here it is for your reading enjoyment. Who needs daytime television with drama like this?
We are in receipt of your letter of June 4th and take issue with its
Your letter seriously misrepresents and manipulates the facts
regarding the recent events pertaining to Microsoft and Yahoo!. You
rely on, as "facts," a series of unsubstantiated allegations from a
complaint filed in a Delaware court which grossly misstate the very
clear record and position established by the Yahoo! Board. Let me
You make reference to our employee retention plan but you
significantly mischaracterize its purpose and its effect. In fact,
you refer to it as a "Poison Pill" which could not be further from
the truth. 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. In fact, our plan has
a "double trigger" which means that in order for an employee to be
eligible for benefits under our plan, there would need to be a
change of control AND the employee would need to be terminated
"Without Cause" or resign for "Good Reason." That means that in
contrast to your assertions, an employee who simply quits his or
her job would receive nothing under our plan.
The retention plan is intended to help us preserve and enhance
shareholder value by allowing Yahoo! to continue to attract and
retain the industry's best talent, and to allow employees to stay
focused on implementing Yahoo!'s business strategy. 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. In adopting this plan, we
believe Yahoo! did the right thing for its employees and its
This plan was fully disclosed at the time of its adoption and should
be no surprise to anyone at this point. It was disseminated to
employees, publicly filed and extensively covered by the media.
Significantly, as you note, Microsoft had indicated that it was
prepared to spend $1.5 billion on retention incentives indicating
that they too recognized that the retention of Yahoo! employees
would have been critical if there had been an acquisition.
Finally, you significantly misrepresent the events of the recent
past. Notably, you accuse us of turning down a $40 per share offer
and "sabotaging" a $33 per share offer. Again, this is patently
untrue. Yahoo!'s Board of Directors has at all times been focused
on maximizing shareholder value. As has been well documented,
Yahoo! has engaged in thorough discussions with Microsoft over a
series of months culminating in Microsoft's decision to walk away
from a potential acquisition of Yahoo!. Throughout this process,
which has included an exploration of multiple strategic
alternatives with multiple parties, the Board has repeatedly stated
that it is open to any transaction, including a sale to Microsoft,
as long as it is in the best interests of shareholders.
You seem to be under the impression that somehow Microsoft will come
back to the negotiating table for a full acquisition of Yahoo!.
This is puzzling as I know you are aware that we have reached out
to Microsoft proactively and met with them many times in the last
several weeks. During this period, their message to us and to the
markets has been and remains that they are not interested in
pursuing a full acquisition of Yahoo!.
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!.
Chairman of the Board