Yahoo Commits Microsoft's Money to Severance PackagesYahoo Commits Microsoft's Money to Severance Packages

Yahoo has set up a sweet severance package for any full-time employee who happens to be terminated without cause or who choose to leave for "good reason" after a "change in control of the company."The package would include regular compensation for up to two years, continued health benefits, accelerated vesting of stock options, and financial assistance in finding a new job. Henry Blodget, cofounder of Silicon Alley Insider, figures it'd cost Microsoft $1-3 billion to provide the package should it wind up acquiring Yahoo.

Analysts see two possible ways this could make the acquisition less attractive to Microsoft. One is the obvious additional expense that would be involved in any reduction of Yahoo staff after the takeover. The other is that it could make it even harder to retain the staff Microsoft did want to keep. Citigroup analyst Mark Mahaney has already warned of a potential "exodus" after a forced merger, and hefty severance benefits would certainly soften the landing for any Yahoo employees who decided to jump.All Things Digital, InternetNews.com