Yahoo adopts severance plans to fend of Microsoft bid

SAN FRANCISCO: Yahoo! Inc, owner of the most-visited US Web site, adopted severance plans for employees that would pay nearly two years of salary to fend off a $44.6 billion bid from Microsoft Corp.

Full-time employees would get at least four months of severance pay and executive officers will get 24 months, Sunnyvale, California-based Yahoo said.

Employees will be eligible for the payments if they are fired or leave for "good reason" within two years of a purchase, Yahoo said.

Yahoo's board, after rejecting Microsoft's offer last week, may be taking steps to make a purchase by the world's largest software maker more expensive. The $31 a-share bid, which was 62 per cent higher than Yahoo's share price the day before, "substantially undervalues" the company, Yahoo said.