UPDATE 3-Icahn, shareholders raise pressure on Yahoo board
(Recasts, adds Icahn comments, details)
By Martha Graybow
NEW YORK, June 10 (Reuters) - Yahoo Inc's YHOO.O board of directors came under increasing pressure over an employee severance plan on Tuesday, with shareholders suing the company demanding a swift trial and investor Carl Icahn threatening to hold the board "personally liable" for approving it.
Both Icahn and the two Detroit pension funds which are suing Yahoo over its rebuff of buyout offer from Microsoft Corp (MSFT.O: Cotización) believe the employee severance scheme was a major factor in de-railing the $47.5 billion deal.
But lawyers for the funds contend in court papers that their litigation "is the only vehicle" for challenging the severance plan and are seeking trial ahead of the company's Aug. 1 annual meeting, where Icahn is seeking to overthrow the Yahoo board.
The plaintiffs contend that the severance arrangement is nothing more than a maneuver to make any takeover of Yahoo prohibitively expensive.
If billionaire Icahn, who is waging a battle for control of the Yahoo board, prevails in his proxy fight, Yahoo could be faced with up to $2.4 billion in potential severance payouts to workers, they argue.
The plaintiffs contend that the company's sitting board is free to reorganize Yahoo's work force as it sees fit without fear of triggering the severance benefits. But if Icahn's board slate prevails, the plaintiffs say, Yahoo shareholders will be forced to fund the costly severance payouts to departing workers.
Yahoo responded on Tuesday in a U.S. regulatory filing denying assertions made in the lawsuit and which activist investor Icahn has relied upon in his campaign to dislodge Yahoo's existing board. Continuación...