In Response to Microsoft's Efforts to Acquire the Firm, the Yahoo

Essay

In response to Microsoft's efforts to acquire the firm, the Yahoo board adopted a "change-in-control" compensation plan in May 2008. The plan states that if a Yahoo employee is terminated by Yahoo without cause (i.e., the employee is performing their duties appropriately) of if an employee leaves of their own volition due to a change in their position or responsibilities within two years after Microsoft acquires a controlling interest in Yahoo, the employee will receive one year's salary. Also, the plan provides for accelerated vesting of all stock options. Yahoo notes that the adoption of severance plan is an effort to ensure that employees are treated fairly if Microsoft wins control. Microsoft views the tactic as an effort to discourage a takeover. With whom do you agree and why?