Yahoo severance plan revised

San Francisco: Yahoo Inc on Wednesday revised an expensive employee and executive severance plan it had adopted following a takeover bid by Microsoft Corp, settling a lawsuit brought by shareholders.

The new terms cut the potential costs to an acquirer and make clear that the sale of Yahoo's search business - which Micro-soft still covets - would not invoke severance benefits.

The move comes as Yahoo searches for a new chief executive to replace Jerry Yang.

The new provisions of the plan state that any Yahoo employee laid off within a year after an acquisition of Yahoo would be eligible for severance, a reduction from two years in the original provisions.