Yahoo weakens its anti-Microsoft 'poison pill'

Yahoo on Wednesday revised a controversial severance plan -- first adopted to defend against a Microsoft buyout bid -- to the point where the plan will no longer apply if a sale of Yahoo's search business does occur.

The plan created in February -- often referred to as Yahoo's "poison pill" -- gives full-time Yahoo employees, including top executives, financial guarantees in the event of a "change in control."

The dilution in the poison pill's strength wasn't entirely voluntary, though, according to a filing on Wednesday with the Securities and Exchange Commission (SEC).

Yahoo amended the program as part of a settlement of a lawsuit filed by disgruntled company shareholders, who charged the severance plan was created to block Microsoft's merger attempt earlier this year.

In effect, the severance plan will no longer even work as a defense against a buyout.

Among other changes, the amended plan states that neither the sale of Yahoo's search business not the election of a new board represents a "change in control."