How Would Yahoo! Protect Its Staff Now?

Two new severance plans to shield employees, is the way Yahoo has adopted now to protect its staff if Microsoft’s unsolicited takeover bid is successful. The announcement came through its filings with the US Securities and Exchange Commission (SEC) on Tuesday.

The new plans filed can be availed by all full-time employees eligible for severance pay equal to base salary for four months to 24 months, based on the employee’s job level. Furthermore health and dental coverage is also included.

The maximum protection of 24 months would be applicable to CEO Jerry Yang, Chief Financial Officer Blake Jorgensen, and several other executives still employed by the company and named in the SEC proxy filing for Yahoo’s 2007 annual general meeting. This list includes former CFO Susan Decker, now president of the company, and Executive Vice President, General Counsel and Secretary Michael Callahan. While the others listed in the proxy filing have already left the company, including former Chairman Terry Semel, former Chief Operating Officer Daniel Rosensweig and former Chief Technology Officer Farzad Nazem.

The employees can avail the benefits, if an employee’s contract is terminated without cause by Microsoft or any other acquirer or even if an employee leaves with a valid reason within two years of a change of ownership. The objective of the severance plans is to help retain employees, maintain a stable work environment and provide certain economic benefits to the employees in case their employment is terminated.

Interestingly, Yahoo’s filing has coincided with Microsoft's reported preparation of a campaign to win shareholder support for changes to Yahoo’s board. Microsoft has been quite unhappy since Yahoo's refusal to accept the proposal.

Furthermore, apart from this type of severance plan, Yahoo could possibly adopt the tactic that Peoplesoft did when its own efforts to ward off a hostile takeover bid by Oracle failed. Back then Peoplesoft had put third-party change-of-control provisions in its customer agreements. The same measure could be taken up by Yahoo as well, but in order to make that happen it needs to find the contracts.

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