The embarrassing shareholder class action lawsuit filed by the pensions funds for Detroit policemen and firemen as well as its city workers against Yahoo! spells out not just what it calls a web of cushy interlocking relationships and rich pay for the board members, but what it says is the real reason why Yahoo!'s board rejected Microsoft's $33 a share offer to buy the Internet giant.
The lawsuit created headlines this week as it contained allegations that the board and Yahoo! chief executive Jerry Yang had enacted a brand new employee compensation plan that acted as a deal spoiler, as it could have encouraged employees to walk out en masse for "any good reason," including changes in job titles, with total payouts reaching as much as $2.4bn, including accelerated stock and stock option vesting for all employees, all sums an acquirer such as Microsoft would have to pay (the reason why Microsoft said it set aside an extra $1.5bn to do the deal).
Already, billionaire activist investor Carl Icahn, who has invested in Yahoo! in a bid to try to unseat its board, says Yahoo!'s new employee severance plan is an indication that Yahoo! is trying to "sabotage" a Microsoft deal.