Yahoo! Fires Back at Icahn

SAN FRANCISCO -- Yahoo!(YHOO Quote - Cramer on YHOO - Stock Picks) returned fire on Carl Icahn, disputing his claims that the company has put into place a "poison pill" that dissuades Microsoft(MSFT Quote - Cramer on MSFT - Stock Picks) from a takeover.

The board's chairman, Roy Bostock, responded to the billionaire investor's accusations in a strongly worded letter, stating that Icahn significantly mischaracterized Yahoo!'s employee retention plan based on unsubstantiated allegations from a shareholder lawsuit.

"To set the record straight, the employee retention program is designed to protect the Company's assets and value during a time of uncertainty," Bostock wrote. "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."

Icahn, who is mounting a proxy fight to replace nine members on Yahoo!'s board of directors come Aug. 1, has been critical of the company for failing to reach a merger agreement with Microsoft, which on May 3, withdrew its $47.5 billion offer.

On Wednesday, Icahn called Yahoo!'s retention program a "poison pill" that would make it cost prohibitive for Microsoft to acquire the tech giant. He also pushed for Yahoo! to remove the program, which he said would allow it to free up $2.4 billion or more.

The basis of Icahn's arguments stem from a shareholder lawsuit made public earlier this week, in which the plaintiffs claim that Yahoo! purposely tried to sabotage the Microsoft deal by offering generous severance packages to employees.

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