Judge Unseals Shareholder Complaint Against Yahoo

A Delaware judge presiding over shareholder litigation against Yahoo has denied the company’s request to maintain a seal over the complaint in the matter. (Complaints are typically public records unless the parties can meet a high bar to keep them confidential.) The news was first reported by Reuters and Barrons.

The complaint contains a range of detailed and potentially inflammatory allegations and information, such as how much directors are compensated for sitting on the Yahoo board. It also provides the history of Microsoft’s courtship of Yahoo and characterizes CEO Jerry Yang as having “deep hostility toward Microsoft.”

The complaint depicts Yang as being self-serving, indifferent to shareholder interests, and never genuinely interested in engaging in discussions with Microsoft. It argues he and complicit Yahoo directors “erected barriers” to a Microsoft acquisition (e.g., golden parachutes for employees, a potential Google search tie up) rather than reasonably considering it on its merits. It also portrays the Yahoo board as breaching its duty to shareholders for delegating the task of negotiating with Redmond exclusively to Yang.

The complaint also alleges that Yahoo turned down an earlier $40 per share offer (during CEO Terry Semel’s reign) in January 2007. That rejection, combined with the history of allegedly evasive or hostile moves toward Microsoft, is intended to build the case that Yahoo directors’ publicly facing statements about pursuing the best interests of shareholders were at odds with their private agenda.