"She made the entire story up in an attempt to save her job and avoid losing hundreds of thousands of dollars in unvested Yahoo stock," Yahoo senior director of engineering Maria Zhang said in a defamation lawsuit filed Wednesday.

Zhang was referring to former software engineer Nan Shi, who filed a complaint against Zhang, accusing her of sexual harassment. Shi is also suing Yahoo (YHOO, Tech30) and Zhang for emotional distress and wrongful termination.

Shi's complaint claims that Zhang "coerced" her to have "oral and digital sex" on multiple occasions. Shi said Zhang promised a "bright future" at the company in exchange for sexual favors. Shi said Zhang threatened to fire her if she refused.

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