Yahoo is trying to conceal large parts of a lawsuit brought against the company by shareholders who say the board should have taken Microsoft’s bid, the AP says. The suit, filed in Delaware about three months ago, is your standard shareholder complaint, but the fact that Carl Icahn’s now making his play makes it more interesting:
In a letter sent Friday to the judge overseeing the case in Delaware, a lawyer for the shareholders argued Yahoo is trying “to whitewash embarrassing documents” because the company thinks the information will damage the board’s efforts to repel a challenge by activist investor Carl Icahn…
Yahoo is trying “to sanitize the public record and maintain a cloak of secrecy regarding unflattering evidence of breach of fiduciary duty,” shareholder attorney Joel Friedlander wrote in a letter to Chancellor William B. Chandler III
The redacted documents include information about an employee severance plan that Yahoo adopted shortly after Microsoft made its initial bid Jan. 31 and notes about a conversation between Yang and Microsoft CEO Steve Ballmer, Friedlander wrote.
It’s standard procedure for companies to redact information if their suits ever get to trial. But count on Carl Icahn to make hay from this: The AP dryly notes that “the information would be particularly damaging to the board if it suggests the directors deliberately took steps to make Yahoo more expensive for Microsoft.”
We doubt they implemented the plan just to make the company more expensive–but retention and spiteful self-enrichment-in-the-event-of-a-takeover were certainly on their minds. In any event, we figure the new severance plan would have added another $1 billion to $3 billion to MSFT’s costs.