Icahn issues 'personally liable' warning to Yahoo board

Billionaire investor Carl Icahn has issued a warning to Yahoo's board of directors, mouthing the ever-fearful two words: "personally liable."

Carl Icahn

Icahn told Reuters on Tuesday that Yahoo directors may be held personally liable for signing off on the company's controversial employee-severance plans. That plan, as previously reported, could financially hamstring Icahn's dissident slate if it is successful in unseating Yahoo's board and taking a majority of the board seats.

"If they continue with this line, I believe they (the board) may be personally liable," Icahn told Reuters after speaking to the New York Financial Writers Association.

Basically, companies usually carry insurance to cover their directors against various liabilities. But, like any insurance plan, there is a cap on the coverage limits. Icahn apparently is anticipating that any legal action against the board may exceed those limits or is willing to argue that the board abdicated its responsibilities, thereby letting the insurance company off the hook.