Billionaire financier Carl Icahn on Wednesday sent a scathing letter to Yahoo chief executive Jerry Yang and the company's board, claiming the two worked together in sabotaging Microsoft's acquisition bid by putting in place a "poison pill" severance package for employees.

In addition, Yang and the board were "deceitful" to employees by telling them the severance package was for their benefit, while failing to mention that Microsoft's proposal included $1.5 billion of retention incentives to hold on to Yahoo engineers and other workers, the dissident investor said.

The "poison pill" instituted by Yang and the board was described in a shareholder lawsuit cited by Icahn, who said the complaint showed that the two parties went "to inordinate lengths to sabotage a Microsoft bid."

"It is insulting to shareholders that Yahoo for the last month has told us that they are quite willing to negotiate a sale of the company to Microsoft and cannot understand why Microsoft has walked away," Icahn said. "However, the board conveniently neglected to inform shareholders about the magnitude of the plan it installed which made it practically impossible for Microsoft to stay at the bargaining table."

According to the complaint, the alleged severance package created "huge incentives for a massive employee walkout" following any Microsoft deal by giving each of Yahoo's 14,000 full-time employees the right to quit his job and pocket generous termination benefits anytime during the first two years after the takeover.

Icahn indicated that he would follow through on his threat to replace Yang and board members if they did not rescind the severance plan and negotiate with Microsoft. However, he questioned whether they could even sell the company to Microsoft, which would likely distrust Yang and the current board in light of their past actions.

"The best chance to bring Microsoft and Yahoo together is to replace Yang and the current Yahoo board with a board that will negotiate in good faith with Microsoft and in whom Microsoft will have trust to operate the company during the long period between signing and closing," Icahn said.

Icahn sent his letter the same day Yahoo president Sue Decker sought to show the company was making progress in the online advertising market by announcing new deals at a New York conference for advertisers.

The agreements included Yahoo distributing display and video advertising for Wal-Mart, and a global partnership with interactive agency Havas Digital. In addition, Yahoo on Wednesday announced an agreement in which Yahoo would gain access to online programming from CBS.

Yahoo was in extensive talks with Microsoft for several months before ending negotiations after the two sides couldn't agree on a price. Microsoft had made a cash-and-stock offer of $31 a share, which placed a value on Yahoo of $47.5 billion.