Yahoo rebuts Icahn: You have no plan
Yahoo Chairman Roy Bostock fired back at Carl Icahn Wednesday evening, accusing the investor of having no comprehension of the facts and no plan for the company besides selling it to Microsoft.
"Your letter seriously misrepresents and manipulates the facts regarding the recent events pertaining to Microsoft and Yahoo," Bostock said in a letter to Icahn. "Conspicuously absent from your letter is any credible plan for Yahoo other than a repetition of your insistence that the company should sell itself to Microsoft."
Bostock's letter came in response to one earlier in the day from Icahn, who accused Yahoo CEO of trying to sabotage Microsoft's acquisition attempt and suggested the company rescind a severance plan detailed in a shareholder lawsuit Yahoo failed to keep under seal.
The severance plan in effect would raise an acquisition price. The severance plan was indeed a major sticking point in the Microsoft-Yahoo negotiations, a source familiar with the situation said.
Here's the full text of Bostock's letter:
Dear Carl:
We are in receipt of your letter of June 4th and take issue with its content.
Your letter seriously misrepresents and manipulates the facts regarding the recent events pertaining to Microsoft and Yahoo!. You rely on, as "facts," a series of unsubstantiated allegations from a complaint filed in a Delaware court which grossly misstate the very clear record and position established by the Yahoo! Board. Let me elaborate:
You make reference to our employee retention plan but you significantly mischaracterize its purpose and its effect. In fact, you refer to it as a "Poison Pill" which could not be further from the truth. To set the record straight, the employee retention program is designed to protect the Company's assets and value during a time of uncertainty. The claim that the plan gives each of Yahoo!'s employees "the right to quit his or her job and pocket generous termination benefits at any time during the two years following a takeover..." is just plain wrong. In fact, our plan has a "double trigger" which means that in order for an employee to be eligible for benefits under our plan, there would need to be a change of control AND the employee would need to be terminated "Without Cause" or resign for "Good Reason." That means that in contrast to your assertions, an employee who simply quits his or her job would receive nothing under our plan.
The retention plan is intended to help us preserve and enhance shareholder value by allowing Yahoo! to continue to attract and retain the industry's best talent, and to allow employees to stay focused on implementing Yahoo!'s business strategy. In fact, the plan was adopted in order to protect the value of Yahoo! in anticipation of a possible acquisition by Microsoft which would have resulted in a lengthy regulatory review and a significant period of uncertainty for our employees. In adopting this plan, we believe Yahoo! did the right thing for its employees and its shareholders alike.
This plan was fully disclosed at the time of its adoption and should be no surprise to anyone at this point. It was disseminated to employees, publicly filed and extensively covered by the media. Significantly, as you note, Microsoft had indicated that it was prepared to spend $1.5 billion on retention incentives indicating that they too recognized that the retention of Yahoo! employees would have been critical if there had been an acquisition.
Finally, you significantly misrepresent the events of the recent past. Notably, you accuse us of turning down a $40 per share offer and "sabotaging" a $33 per share offer. Again, this is patently untrue. Yahoo!'s Board of Directors has at all times been focused on maximizing shareholder value. As has been well documented, Yahoo! has engaged in thorough discussions with Microsoft over a series of months culminating in Microsoft's decision to walk away from a potential acquisition of Yahoo!. Throughout this process, which has included an exploration of multiple strategic alternatives with multiple parties, the Board has repeatedly stated that it is open to any transaction, including a sale to Microsoft, as long as it is in the best interests of shareholders.
You seem to be under the impression that somehow Microsoft will come back to the negotiating table for a full acquisition of Yahoo!. This is puzzling as I know you are aware that we have reached out to Microsoft proactively and met with them many times in the last several weeks. During this period, their message to us and to the markets has been and remains that they are not interested in pursuing a full acquisition of Yahoo!.
Conspicuously absent from your letter is any credible plan for Yahoo! other than a repetition of your insistence that the Company should sell itself to Microsoft. Indeed, your stated view that "the only way to salvage Yahoo! in the long if not short run is to merge with Microsoft" demonstrates that you have no other plan and causes one to wonder what exactly would happen to our Company if you and your nominees were to take control of Yahoo!.
Sincerely,
Roy Bostock Chairman of the Board
Stephen Shankland writes about a wide range of technology and products, but has a particular focus on browsers and digital photography. He joined CNET News in 1998 and since then also has covered Google, Yahoo, servers, supercomputing, Linux and open-source software, and science. E-mail Stephen, or follow him on Twitter at http://www.twitter.com/stshank. 
I don't see why Yahoo doesn't just ignore this guy and let him fume in silence. By addressing him, they say his ideas are worth notice. The execs can do whatever they want, so why should one shareholder, whatever his reputation, get to keep on badgering them like this when they've made it clear that they don't have any plans to do what he wants them to.
On the upside, iCon has no real logical backing in his argument for selling out, as this article clearly points out. Yahoo's response was too cordial by half.
You want a plan, here is a plan. Let the stock price of your publicly traded organization drop to say 20 then take it private for around 25 Billion. Then, both of you can continue to play with investors' money at your leisure. Today however, Yahoo is a public company and should be managed as such. If you are not capable of managing to derive the greatest shareholder value, you should step down. It would appear that you have demonstrated managerial incompetence by allowing a freak like Carl to manage the organization from the outside. Yahoo is not your toy, you lost, Google over it and move on.
The GM model. "Only look at the next quarter"
The Toyota model "We are in this for the long haul".
Sure GM had some great quarters and Toyota had a rough haul here and there. But the better result in the long run is clear. Based on how Yahoo is acting they seem closer to Toyota and are having a rough spell because others are trying to force the GM model on them.
The GM model. "Only look at the next quarter"
The Toyota model "We are in this for the long haul".
Sure GM had some great quarters and Toyota had a rough haul here and there. But the better result in the long run is clear. Based on how Yahoo is acting they seem closer to Toyota and are having a rough spell because others are trying to force the GM model on them.
- by cardonamartha July 7, 2008 12:45 PM PDT
- In response to by nzamparello earliers blog, I totally agree with you and Mr. Icahn's interest. IWhenever I fly and I talk to former TWA employees, not one former employee has a positive comment to say. Cuz, now they r working for American Airlines and other former empoyees retired, health care benefits has been subject to cut backs. Wow, Icahn really sleeps well at night.
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