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Buyout severance angers corporate raider

As Carl Icahn preps his proxy fight for Yahoo's board, he wants the company to eliminate the poison pill provision that pays employees lavishly if they leave Yahoo after a takeover.

The disruptive investor probably holds a secret, grudging admiration for Yahoo's biggest defense against a hostile acquisition, as All Things D suggested. Had Microsoft succeeded in its plan, they faced a two-year period where employees could walk away from Yahoo with a big payoff.

Icahn criticized that move in another letter to Yahoo chairman Roy Bostock. Later, Icahn expanded upon his views on CNBC about the poison pill's impact:

“You really might need a new board and a new CEO because of all this entrenchment and shenanigans that have gone on here. Microsoft might not have the faith in the current board and CEO Jerry Yang to be the steward of the company for a year (as the takeover is worked out). And that might be one of the reasons they walked away.”

“Another reason which is unconscionable in my opinion is this $2.5 billion severance package that the lawsuit speaks about. To me that is another reason why they don’t want to do it.”

“It’s completely disingenuous,” says Icahn. "And (Yahoo President) Sue Decker says today that we’re doing everything we can but the price isn’t high enough. Well the price isn’t high enough because of the new severance package. How do you go and tell Microsoft that you’re paying $45 billion but we’re (creating incentives) for this workforce to leave."

Yahoo faces several lawsuits about the aborted takeover talks with Microsoft, which said they are not interested in talking about an acquisition again. The two companies have discussed side deals regarding search and advertising, but Icahn thinks that would be "terrible for shareholders."