The technology firm Yahoo, Inc., based in Sunnyvale, California, and best known for its Internet search engine, has been under attack this year from take-over giants in the media and technology industries, most notably Seattle-based Microsoft, Inc. Yahoo’s CEO Jerry Yang has famously and successfully rejected and tried to thwart every take-over bid. In February, Yahoo’s management, no doubt with Mr. Yang’s support, put a sneaky plan in place to further scare off any would-be suitors by offering all employees generous Employee Retention Agreements, with benefits that would kick in if Microsoft or another suitor ever acquired Yahoo and decided to terminate the employment of any employee. These benefits included:
- 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
- The ability to leave the company–and trigger the severance payments–for any “good reason.”
Yahoo justified the plans as an important measure to retain key employees in the wake of uncertainty. While this may be true, these Employee Retention Agreements are extremely generous by any standard, and will be expensive liabilities for whichever media or technology giant is “lucky” enough to purchase the company.
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