Consider witness protection

A shareholder who filed a complaint against Yahoo's board has been denied a request for a seal, which protects a complainant's identity if it meets certain standards for confidentiality.

"Defendants have not satisfied their burden to show good cause for the continued filing of the portions of the complaint under seal," wrote Judge William Chandler of the Delaware chancery court, which denied the request. View a copy of Chandler's ruling (PDF).

The dispute revolves primarily around how Yahoo management managed — or rather, failed to manage — Microsoft's takeover offer, which stretched for months and ultimately resulted in Yahoo refusing the bid under grounds it was too low. (Despite swaggering from Microsoft, it did raise its offer in the end.)

The plaintiffs argue that co-founder David Filo and CEO Jerry Yang failed to meet their responsibility to shareholders by "erecting barriers to the deal through new compensation plans that would essentially make it more advantageous for employees to leave the company in the event of a hostile takeover," reports Barron's. It also suggests Yang thwarted the Microsoft deal because of personal sentiments.

Lastly, the complaint revealed that in January 2007, Microsoft offered to buy Yahoo for $40 per share. The proposal was declined by former Yahoo CEO Terry Semel, who suggested a "commercial partnership arrangement" instead.

In its most recent refusal to Microsoft, Yahoo said it would not take a bid lower than $37 per share.

View a copy of the complaint (PDF), which includes excerpts of emails between Yahoo's managing team and Compensia, a compensation consulting firm it worked with.

Image credit: Farcus.