Great work simply doesn’t happen in environments with so little trust. Revoking the “yard time privileges” like this reeks of suspicions that go far beyond just people with remote work arrangements. Read this line one more time: “please use your best judgment in the spirit of collaboration”. When management has to lay it on so thick that they don’t trust you with an afternoon at home waiting for the cable guy without a stern “please think of the company”, you know something is horribly broken.
Companies that feel the need to control a worker’s time this much have no real understanding of the creative process, and Yahoo has been making that mistake for a decade now. Additionally, reducing access, privileges, and trust will only create a bitter, tired workforce incapable of caring about an organization’s long term goals.