Yahoo C.E.O. Jerry Yang mapped out a scorched-earth defense against Microsoft, essentially arranging to encourage all 14,000 Yahoo employees to quit if Microsoft succeeded in buying the company earlier this year, newly released court documents suggest.

Yahoo executives also declined to tell its employees that Microsoft was prepared to offer them $1.5 billion in retention bonuses if they would stay with the company after a merger was completed, documents say.

A Delaware state court judge today unsealed a class-action complaint by two pension funds that sued Yahoo's board, claiming it failed to protect shareholders' interests after Microsoft offered to acquire Yahoo for $44.5 billion in January.

The 42-page complaint, filed by the New York class-action specialist law firm Bernstein Litowitz Berger & Grossman, gives a window into internal discussions at Yahoo, and includes copies of internal emails among Yahoo executives.

The complaint asserts that the Yahoo board "handed to Yang responsibility for direct negotiations with Microsoft," and that "none of Yahoo's independent directors attended critical meetings with the company."

As early as January 31, the day Microsoft chief executive Steve Ballmer emailed his offer to Yang, Microsoft made clear it wanted Yahoo "employees to be okay" and had earmarked "$1.5 billion for the retention of employees" in addition to the "$5 billion for [the] deal," according to notes made that day by an unidentified Yahoo employee. But that fact was never conveyed to Yahoo's employees.

Meanwhile, Yang was engineering a plan for a "massive employee walkout" in the aftermath of a Microsoft takeover by offering all of Yahoo's 14,000 employees the right to quit his or her job and pocket 100 percent acceleration of their equity rights, if there was "substantial adverse alteration" of their jobs.

Yahoo's compensation consultant calculated that the proposal would cost $1.5 billion, or 3.2 percent of the transaction price. "That's nuts," he concluded in an email.