Microsoft may spend big to keep Yahoo staff

Shareholder court action reveals possibile staff retention plans at search engine

The deadline for Yahoo to respond to Microsoft's takeover offer has expired

Microsoft has considered setting aside $1.5bn (£762m) for the retention of Yahoo staff if the company's takeover attempt proves successful.

The figure was revealed as part of a shareholder action lawsuit filed against Yahoo in February by two pension funds. The earmarked sum was originally discussed by counsels from both companies and was referenced by lawyer Edward Welch in a hearing on 24 March.

Welch also said that Yahoo was not planning to make any further job cuts beyond the 1,000 redundancies made in February this year. A full transcript of the hearing has been made available here by lawfirm Bernstein Litowitz Berger & Grossmann LLP.

The case against Yahoo was filed by shareholders on the grounds that the search firm did not respond in good faith to Microsoft's $44.6bn takeover offer. The extended deadline for the proposal expired last weekend, but both companies have yet to make a public statement on the matter.

US media sources are reporting that Microsoft may nominate a proxy slate of directors to replace the Yahoo board. The software giant previously announced that it would consider inciting a shareholder revolt if its initial bid were to be rejected.