(CN) – A federal judge in San Francisco dismissed a shareholder derivative action against Yahoo’s board of directors, saying a settlement had already been reached over shareholders’ claims for breach of fiduciary duty and securities violations.
Congregation Beth Aaron’s claims stemmed from Microsoft’s bid to purchase Yahoo for $42 billion in 2008. Shareholders said the board intentionally threw insurmountable obstacles in Microsoft’s path so it would abandon the proposal.
Under the proposal, Microsoft would have acquired all outstanding shares of Yahoo stock at $33 per share, increasing the value to shareholders by $5 billion.
But instead of considering shareholder interest, the board allegedly approved two “change in control severance plans,” which provided certain employees with extremely generous severance packages should they resign or be let go following a takeover.
The approved plans would have increased the cost of the Microsoft acquisition by up to $2.4 billion.
U.S. District Judge Ronald Whyte of San Jose, Calif. found that the plaintiff belonged to an already settled class action out of Delaware, in which shareholders agreed to release all claims against the board in exchange for the board’s promise to modify the severance plans.
The Delaware judgment barred shareholders from pursuing any already-settled claims against the board for breach of fiduciary duty and securities violations, White ruled.