Microsoft has made their intentions about taking over Yahoo very clear, and are determined to succeed. Yahoo, perhaps sensing the inevitable at this point, has gone ahead and adopted new severance plans to take effect in the event of a Microsoft take over.
The plans would cover all of Yahoo’s full-employees, including top executives, for two years after a change in control of the company. Those workers who lose their job without just cause, or quit for “good reason”, would continue to receive their salary and medical benefits for an additional four to twenty-four months. They would also be reimbursed for “outplacement services” for two years, and the departing employees’ stock options would also vest faster than scheduled.
Yahoo has indicated that this was designed to retain staff in light of an uncertain future, to make sure that they don’t all jump ship now in anticipation of a takeover. Nevertheless, such a change in severance packages would increase the cost of a takeover significantly for Microsoft.
Microsoft has indicated that a takeover would save around $1 billion, but has not said whether the savings would be at least in part as a result of layoffs. The new severance packages would put a dent in those anticipated savings, at least for the first two years, if Microsoft had any plans to layoff existing Yahoo employees.