Yahoo CEO Sidesteps Resignation in Padded-Resume Controversy
Yahoo CEO Scott Thompson, who didn't earn the computer science degree in 1979 his resume claims, apologized about the discrepancy in an emailed note to company employees May 8 but ignored requests to resign, as has been demanded by at least two powerful stockholders.
Yahoo, which acknowledged the mistake on Thompson's resume on May 3, used the resume in a regulatory filing with the Securities and Exchange Commission last week and has called the misinformation an "inadvertent error."
"I want you to know how deeply I regret how this issue has affected the company and all of you," Thompson wrote, as reported by Reuters and the Associated Press, who obtained copies of the memo. "We have all been working very hard to move the company forward and this has had the opposite effect. For that, I take full responsibility, and I want to apologize to you."
Thompson (pictured) did not address the fact that at least two powerful stockholders have called for his resignation.
Yahoo's board of directors met the afternoon of May 7 to discuss how to handle the issue. Thereafter, the board revealed it has formed a special committee to conduct a thorough review of Thompson's academic credentials, "as well as the facts and circumstances related to the review and disclosure of those credentials in connection with Thompson's appointment as CEO," the company said in a statement to the media.
The special committee will be chaired by Alfred Amoroso, an independent director who joined the board in February of this year. The other members of the special committee are John Hayes and Thomas McInerney, independent directors who joined the board in April of this year.
"The special committee and the entire Board appreciate the urgency of the situation, and the special committee will therefore conduct the review in an independent, thorough and expeditious manner. The Board intends to make the appropriate disclosures to shareholders promptly upon completion of the review," Yahoo said.
His Program of Study Was in Accounting
Hedge fund director Daniel Loeb, whose firm, Third Point, owns 5.8 percent of the company, did the original research, revealing May 3 that Thompson actually earned a degree in accounting at Stonehill College in Massachusetts.
"If Mr. Thompson embellished his academic credentials, we think that it 1) undermines his credibility as a technology expert, and 2) reflects poorly on the character of the CEO who has been tasked with leading Yahoo at this critical juncture," Loeb wrote in his May 3 letter to Yahoo's board. "Now more than ever Yahoo investors need a trustworthy CEO."
Another vocal stockholder, Eric Jackson of Ironfire Capital--which owns about 3.2 million Yahoo shares--joined Loeb a few days later in demanding that Thompson resign.
Jackson, a vocal opponent of Yahoo's decision to reject a Microsoft buyout in 2008, told the San Jose Mercury News May 4: "Thompson's got to go. Putting shareholders aside, I don't know how any engineer at Yahoo could listen to that guy from now on and not think in the back of their mind, 'Why in the heck would you make up that you studied computer science?' It's going to be completely distracting. Maybe he can reconstruct his reputation somewhere else."
Will Respect Plan to Conduct Investigation
Thompson also said in his May 8 memo that he would respect the board's plans to conduct a thorough and independent review.
"I am hopeful that this matter will be concluded promptly," Thompson wrote. "But, in the meantime, we have a lot of work to do."
While admitting the resume error, Yahoo defended its new CEO, who took over in January.
"It in no way alters that fact that Mr. Thompson is a highly qualified executive with a successful track record leading large consumer technology companies," Yahoo said in response to Loeb's May 3 letter.
But Loeb, in his subsequent response to Yahoo on May 4, described Yahoo's statement as insulting to shareholders.
"This, in our view, is the height of arrogance. Mr. Thompson and the board should make no mistake: This is a big deal. CEOs have been terminated for less at other companies," Loeb said in a letter to Yahoo's board.
Editor's note: This story has been updated to include new information about the board of directors' committee that will look into details concerning Thompson's academic credentials.
Chris Preimesberger is Editor of Features and Analysis at eWEEK. Twitter: @editingwhiz