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Yahoo Again Amends Employee Severance Plan, But This Time To Protect Their Interest

April 15
8:08 AM 2016

Yahoo Inc. has just changed its employee severance plan apparently in a bid to clear the way for changing ownership. Under the new plan, employees are entitled to their severance payments even when part of the business is sold out. The move suggests for a possible sale of its core operating business or some other parts of the company in the days ahead.

Yahoo has modified the definition of 'change in control' through including the sale of substantially all of the company's operating business, reveals a Yahoo regulatory filing submitted on Thursday. The filing indicates that the new severance package will remain effective for all employees even in case of laying-off during the post acquisition period, analyzes a report published in Business Insider.

The old severance package will get affected with the change in ownership of the entire company. The previously effective policy is believed to somehow creating obstacles in changing ownerships of Yahoo's multi-billion dollar stakes in Asian companies, according to another analysis by Bloomberg.

Parent company of the Daily Mail, the UK based newspaper and global tabloid website has been negotiating with several private equity firms about a possible bid for Yahoo. However, the negotiation involves a wide range of suitors. Among them, The Wall Street Journal names Verizon Communications Inc. as the front runner, reports MarketWatch.

The substituted language also allows Yahoo execs keeping their monthly vesting schedule instead of reverting back to standard quarterly installments if core business gets sold. Though effective from January 2015, the monthly schedule remains valid with the change in employee severance package.

However, potential bidders are scheduled to place their preliminary offer on Monday. Parallel to the efforts for selling core operations, Yahoo has also been considering a separate plan to turn around the business under CEO Marissa Mayer. Under a change in control scenario, Mayer is entitled to decide fate for around $48 million in unvested stock and options.

The move offers some protection for the interest of the employees. The regulatory filing guides someone to anticipate that some-kind of sale is going to take place shortly, cites Eric Jackson from SpringOwl Asset Management.

But Jackson doesn't consider the move as a defensive one aiming to make any take-over more costly or difficult for the potential buyer. Yahoo has amended its severance plan in 2008 in a bid to force Microsoft to acquire it for $3 billion. That particular move has eventually compelled Microsoft to retreat from its acquisition plan.

Yahoo has amended employee severance plan in 2008 aiming to increase its value to foil Microsoft's bid for acquiring the business. On Thursday, a regulatory filing by Yahoo suggests that it has again changed the plan. But this time, analysts presume, the move is probably aimed to protect employees' interest since the tech giant has been considering selling at least part of its core business.

 

 

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