Yahoo 2007 Annual Report Download - page 34

violation of Section 10(b) of the Securities Exchange Act of 1934. The derivative actions seek unspecified
damages, equitable and injunctive relief, including, among other things, changes to corporate governance and
internal procedures, restitution and disgorgement of profits and compensation received by defendants, costs and
attorneys’ fees.
Since February 1, 2008, four separate shareholder lawsuits have been filed in the California Superior Court,
Santa Clara County, against Yahoo! Inc., members of the Board of Directors and selected former officers by
plaintiffs Edward Fritsche, the Thomas Stone Trust, Tom Turberg and the Congregation Beth Aaron (the “California
Lawsuits”). The plaintiffs in the California Lawsuits purport to assert class claims on behalf of all Yahoo!
stockholders, except defendants and their affiliates. In addition, certain of the plaintiffs in the California Lawsuits
purport to assert shareholder derivative claims on behalf of Yahoo! Inc. The complaints allege that the Yahoo!
Board of Directors breached fiduciary duties in connection with Microsoft’s unsolicited proposal to acquire Yahoo!.
The plaintiffs in two of the California lawsuits allege that Microsoft’s February 1, 2008 unsolicited proposal to
acquire Yahoo! is inadequate and that the Yahoo! Board of Directors breached fiduciary duties by favoring
Microsoft’s unsolicited proposal. The plaintiffs in the other California Lawsuits allege that the Yahoo! Board of
Directors breached fiduciary duties by, among other things, failing to negotiate a transaction with Microsoft or other
potential bidders in the past and presently. The complaints in the California Lawsuits seek declaratory and
injunctive relief, as well as an award of plaintiffs’ attorneys’ fees and costs. With respect to the derivative claims, no
relief is sought from the Company.
Since February 11, 2008, three separate shareholder lawsuits have been filed in the Court of Chancery of the State of
Delaware against Yahoo! Inc. and members of the Board of Directors by plaintiffs, The Wayne County Employees’
Retirement System, Ronald Dicke, and The Police and Fire Retirement System of the City of Detroit along with The
General Retirement System of the City of Detroit (the “Delaware Lawsuits”). The plaintiffs in the Delaware
Lawsuits purport to assert class claims on behalf of all Yahoo! stockholders, except defendants and their affiliates.
Plaintiffs in the Delaware Lawsuits generally allege that defendants breached fiduciary duties by rejecting
Microsoft’s February 1, 2008 unsolicited offer to acquire Yahoo! Inc. without fully informing themselves whether
Microsoft would offer additional consideration and that defendants are not acting in the best interests of
shareholders and are seeking to entrench themselves. One of the Delaware Lawsuits alleges that the Board of
Directors have pursued various blocking transactions, adopted an employee severance plan, and a shareholder rights
plan in violation of fiduciary duties. The complaints in the Delaware Lawsuits seek unspecified damages,
declaratory relief and injunctive relief, as well as an award of plaintiffs’ attorneys’ fees and costs.
We may incur substantial expenses in defending against such claims, and it is not presently possible to accurately
forecast their outcome. We do not believe, based on current knowledge, that any of the foregoing legal proceedings
or claims are likely to have a material adverse effect on our financial position, results of operations or cash flows. In
the event of a determination adverse to Yahoo!, its subsidiaries, directors or officers, we may incur substantial
monetary liability, and be required to change our business practices. Either of these could have a material adverse
effect on our financial position, results of operations or cash flows.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth quarter of 2007.
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