Will Yahoo Fire CEO, Shake Up Board?

A Yahoo shareholder is calling out CEO Scott Thompson for a puffed-up resume — and the search engine company has come clean.

Yahoo’s board named Thompson to replace Carol Bartz as chief in January and he has made some major moves, including restructuring, layoffs and filing patent suits against Facebook.

But Daniel Loeb, CEO of Third Point, is taking issue with Thompson and the board. Loeb’s fund owns a 5.8 percent stake in Yahoo and he is reportedly trying to shake up the board with the revelation that Thompson doesn’t have a bachelor’s degree in computer science as is indicated on his resume.

Thompson’s degree is in accounting, though he does have tech industry experience as the former president of eBay’s PayPal division. Still, the college he attended near Boston, Stonehill College, didn’t even start offering computer science degrees until four years after he graduated.

“We inquired whether Mr. Thompson had taken a large number of computer science courses, perhaps allowing him to justify to himself that he had ‘earned’ such a degree,” Loeb wrote in a letter to Yahoo’s board. “Instead, we learned that during Mr. Thompson’s tenure at Stonehill only one such course was even offered — Intro to Computer Science. Presumably, Mr. Thompson took that course.”

Shareholder Wants Answers

As Loeb sees it, if Thompson embellished his academic credentials it undermines his credibility as a technology expert and reflects poorly on the character of the CEO who has been tasked with leading Yahoo. Now, more than ever, he said, Yahoo investors need a trustworthy CEO.

“Shareholders must also question how the board of directors, specifically the Search Committee chaired by Ms. Patti Hart, could permit the company to hire a CEO with this discrepancy in the public record,” Loeb said. “Should our concerns about Mr. Thompson’s record be accurate, that would call into serious question whether the Board failed to exercise appropriate diligence and oversight in one of its most fundamental tasks — identifying and hiring the Chief Executive Officer.”

Loeb then dug into Hart’s academic background and claims discrepancies there. According to public filings, Hart holds a bachelor’s degree in marketing and economics from Illinois State University. However, Loeb says his investigation shows her degree is in Business Administration.

“Third Point believes Mr. Thompson and Ms. Hart owe Yahoo, its board of directors and its shareholders an explanation,” Loeb said. “We also call upon the board to immediately commission an independent investigation to determine whether these individuals made misrepresentations to the Yahoo! Board and the investing public or have violated the Company’s Code of Ethics.”

Will Thompson Get Booted?

Yahoo confirmed on Friday that Thompson’s credentials were exaggerated but called it an “inadvertent error.” The Wall Street Journal’s All Things D news blog obtained a formal statement from Yahoo: “In connection with the statement the company made earlier today about Scott Thompson, the Yahoo board will be reviewing this matter, and upon completion of its review, will make an appropriate disclosure to shareholders.”

We asked Greg Sterling, principal analyst at Sterling Market Intelligence, his thoughts on the Yahoo CEO resume confusion. He told us this type of incident is not entirely uncommon.

“These sorts of scandals have happened with executives in the past at other companies,” Sterling said. “It’s embarrassing for Yahoo and for Thompson. I don’t think it will result in any long-term consequence for either, however.”
 

Jill K:

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