Yahoo’s Takeover Defense: Scorched Earth Policy

New provisions to provide generous severance packages to all full time Yahoo employees makes a takeover a more expensive proposition.

Yahoo would like its employees to focus on their day to day tasks rather than the specter of a Microsoft takeover. But if someone buys Yahoo, those employees will have the option to depart with a nice package, courtesy of the shareholders of the acquiring company.

At Silicon Alley Insider, details of the plan include the ability to trigger the package by simply deciding to leave the company. The parting gifts looks like a Fortune 500 version of The Price Is Right’s showcase prizes:

•  up to two years of full pay and benefits following departure,
•  $3,000-$15,000 of “outplacement services” (help finding a new job),
•  accelerated stock and option vesting, and
•  the ability to leave the company – and trigger the severance payments – for any “good reason” (including, presumably, that you’d rather get paid not to work)

The longest benefits go to the most senior executives, but even the lowliest full time Yahoo gets something out of saying ‘buh bye’ to Microsoft if the takeover succeeds. SAI’s Henry Blodget goes on to say the packages “torpedoed” whatever remaining loyalty to existing management Yahoo employees may have today.

“Yahoos are now going to welcome Microsoft – or any other acquirer – with open arms,” said Blodget.