SAN FRANCISCO - Financier Carl Icahn is calling for Yahoo! ( YHOO) to remove a provision for generous severance packages to company employees, which he deemed as a major deterrent for a Microsoft ( YHOO) takeover. The billionaire investor shot off a letter to Yahoo! on Wednesday, in which he borrowed heavily from a shareholder lawsuit claiming that the tech giant had purposely tried to sabotage a merger deal with Microsoft by introducing the severance packages. "The board can rescind the 'severance plan' that is the largest impediment to a Microsoft deal," Icahn wrote. "You currently can do this because Microsoft withdrew their bid 30 days ago. It is time for you to stop misleading your shareholders with respect to Microsoft." Icahn added that by removing the severance plan, Yahoo! could free up about $2.4 billion. "It is also time to admit to your shareholders that the severance plan was not done for your employees (who you conveniently neglected to inform that Microsoft had earmarked $1.5 billion in retention incentives for), but rather was done simply as an entrenchment device and to impede a Microsoft bid," he wrote. A Yahoo! spokesperson could not immediately be reached for comment. On Jan. 31, Microsoft made an unsolicited $44.6 billion offer for Yahoo!, and later bumped the amount to $47.5 billion but still could not reach an agreement. Since then, Microsoft has said it is no longer interested in a merger but is currently in talks with Yahoo! to come up with an alternative deal.
Icahn, however, wants the merger and has come up with a dissident slate of candidates to oust Yahoo!'s board and bring Microsoft back to the table. "I and many of your shareholders believe that the only way to salvage Yahoo! in the long if not short run is to merge with Microsoft," he wrote. Icahn is also pushing to remove Jerry Yang as Yahoo!'s CEO, adding that he and the rest of the board have made it extremely difficult for Microsoft to renew negotiations. In his typical colorful language, Icahn wrote: "Until now I naively believed that self-destructive doomsday machines were fictional devices found only in James Bond movies. I never believed that anyone would actually create and activate one in real life. I guess I never knew about Yang and the Yahoo Board." Yahoo! has defended its position all along, emphasizing that Yang and the board have been "crystal clear that it would consider any proposal by Microsoft that was in the best interests of its shareholders." Who shareholders ultimately believe will be determined on Aug 1 at Yahoo!'s annual meeting in San Jose, where they will vote on the company's board members. Shares of Yahoo! were down by less than 1%, or 3 cents, to $26.82 in after-hours trading.