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Yahoo CEO Jerry Yang sent an e-mail to employees at the end of last week addressing Microsoft's unsolicited offer to buy the company, and it has since been filed with the Securities and Exchange Commission. (Link via ZDNet.) Yang made it clear that Yahoo is leaving its options open.

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first, we want to emphasize that absolutely no decisions have been made -- and, despite what some people have tried to suggest, there's certainly no integration process underway. this proposal is just that -- a proposal. and it was only made in the last 24 hours. you can be sure the board is going to review it thoughtfully and carefully, and do what's right for our great company. microsoft's proposal is one of many options that we're evaluating in order to maximize value for our shareholders and employees over the long-term. that's why we will respond to microsoft after our board has completed a careful review of all of our strategic alternatives.

Microsoft Chief Executive Steve Ballmer addressed Yahoo's deliberations when talking with Wall Street analysts this morning, calling Microsoft's bid of $31 a share "generous." He added, "We trust the Yahoo board and the Yahoo shareholders will join with us quickly in deciding to move down an integrated path."

However, Microsoft also appears to be preparing for the possibility that the Yahoo board won't put the offer to a shareholder vote. In his letter to Yang last week, Ballmer wrote that Microsoft "reserves the right to pursue all necessary steps to ensure that Yahoo!'s shareholders are provided with the opportunity to realize the value inherent in our proposal."

Bloomberg News added this detail in a story today: "Microsoft may seek to oust Yahoo's directors should they reject the bid and submit its own slate of nominees, according to a person familiar with the matter who asked not to be identified. The deadline for board nominations is March 13."

Also see this Associated Press story examining Yahoo's options: Microsoft bid backs Yahoo into a corner.