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Yahoo’s headaches don’t seem to subside.
The troubled Web search and services company is on the defensive against one of its largest stockholders, hedge fund director Daniel Loeb, who did some research and found that the company’s new CEO, Scott Thompson, didn’t earn a degree in computer science as his resume states. Yahoo also used the misinformation in a regulatory filing with the SEC last week.
Thompson (pictured), who replaced Carol Bartz four months ago as CEO, attended Stonehill College in Easton, Mass., and attained an accounting degree there in 1979, according to the institution’s Website. Stonehill didn’t offer a computer science degree when Thompson was an undergraduate, Loeb said.
Yahoo confirmed Loeb’s accusation on May 3, saying that it was an “inadvertent error” and that the incorrect information “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’s board of directors now will review Thompson’s background, a company spokesman told Reuters. Yahoo will also make an appropriate disclosure to shareholders when the review is complete, the spokesman said.
Other companies have suspended or fired executives who were caught falsifying their resumes.
Thompson was CEO of PayPal and was named Ernst & Young Entrepreneur of the Year in 2011 before moving to Yahoo in January.
Shareholder Has an Agenda
Loeb, whose Third Point private equity firm owns a 5.8 percent stake in Yahoo, hasn’t been satisfied with the company’s financial performance and has had an agenda for a while against the Yahoo leadership. Not only does he want Thompson to be ousted, he also wants the entire board of directors to go–including the head of the search committee that selected Thompson, board member Patti Hart.
“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 a letter to Yahoo’s board. “Now more than ever Yahoo investors need a trustworthy CEO.”
Loeb said the mix-up was an example of Yahoo’s poor corporate governance and described the misinformation as a violation of Yahoo’s code of ethics. He also called for an independent investigation to find out if Thompson had purposely misled the board about his technology credentials.
Yahoo recruited Thompson to rescue it from years of financial setbacks that have dogged the company, despite the fact that advertising dollars have been increasing for the Internet. Yahoo’s stock, which has been selling in the $10 to $20 range for several years, closed at $15.40 on May 3.
The stock was selling for more than $33 in 2008 when Microsoft offered to buy the company for $47 billion, an action that was opposed by former longtime board chairman Roy Bostock, co-founder Jerry Yang and a majority of the board in spring 2008.
Turnover on the Board
Yahoo, once the leading search engine on the Internet, has been struggling for about 10 years. On Feb. 8, four members of the Yahoo board, including Bostock, resigned under pressure from shareholders.
For about seven years, Yahoo ranked as the world’s No. 1 Internet search engine. However, Google bypassed it in general usage in about 2002. Facebook, Twitter and other social media services also have taken page views from Yahoo, which is still the No. 2 search provider and whose Yahoo Mail is the world’s leading Webmail application.
Yahoo’s search engine never has been able to work as quickly or as efficiently as Google’s, and it has paid a steep price for being surpassed. It also has not been able to get as much traction as Google and other Web service providers on features such as Web documents, collaboration tools, calendaring, texting and others.
Chris Preimesberger is eWEEK’s Editor for Features and Analysis. Twitter: @editingwhiz