A timely snapshot; see this NYT article (no subscription required) for more details
The complaint, filed by Yahoo shareholders, alleges the severance plan was designed to thwart Microsoft's bid. According to Yahoo estimates, the plan could have added $462 million to $2.1 billion to Microsoft's costs, based on Microsoft's initial offer of $31 a share, or $44.6 billion, court documents show.
The complaint calls Yahoo's severance plan "highly unusual" and alleges the company was "throwing sand in the gears of Microsoft's plans for a smooth integration."
The filing also says Microsoft had offered to buy Yahoo for about $40 a share in January 2007, roughly a year before its recently aborted offer. The suit says Yahoo's then-Chief Executive Terry Semel responded to the earlier offer via a "board-authorized" letter in which he rejected "a broader strategic transaction at [that] time" but remained open to a "commercial partnership arrangement."
Turned down $40/share approximately a year before the most recent ($31/share, later raised to $33/share) Microsoft offer. That was the same senior management team that reportedly turned down an opportunity in 2002 to buy pre-IPO Google (for $2B), before Google left it in the dust...