Yahoo Under Fire From Shareholders As Well As Microsoft

Yahoo has been beleaguered by problems this year. They have somehow managed to weather a financial slump and a hostile takeover bid by Microsoft (the second try by the big company, it turns out), a planned slew of layoffs totaling in the thousands, plus rumors of offers from other big names in tech as well, including industry giant Google. Now they face hostile fire from within.

Yahoo shareholders filed a lawsuit against the company. The lawsuit alleges that shareholders were adversely affected when Yahoo directors refused a buyout offer from Microsoft the previous year. In doing so, according to the suit, the directors were acting against the best interest of shareholders in favor of maintaining their own financial status quo.

According to our source, the directors made between $588,484 and $649,788 in 2006. Declining the original offer from Microsoft allowed them to continue to receive this money. According to the lawsuit, this means that the directors did not choose the option that maximized value for the shareholders.

Shareholder suits are fairly commonplace when a company's stock begins to take a nose dive. The most common reason for filing them is to launch a class action suit, however; few go further than the initial ruling. With so much at stake for Yahoo this year, this shareholder lawsuit may get a bit more attention than many, but will it go the distance in the face of so many other issues? It's hard to tell. I'm guessing not.