In response to Microsofts efforts to acquire the firm, the Yahoo! board adopted a change in-control compensation

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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 stated that if a Yahoo! employee’s job is terminated by Yahoo! without cause (i.e., the employee is performing his or her duties appropriately) or if an employee leaves voluntarily due to a change in 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 the 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?

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