Yahoo CEO Thompson forced to quit over his CV claims
Embattled Yahoo chief executive Scott Thompson has left the company after just four months amid more than a week of scrutiny into inaccuracies on his biography and in company filings.
The struggling internet company had hoped that Mr Thompson, who became CEO in January, would turn things around. But he now becomes the fourth to leave Yahoo in five years. He is being replaced by Yahoo's global media head Ross Levinsohn.
Mr Thompson's exit last night was encouraged by Third Point, the activist hedge fund that owns nearly 6% of Yahoo shares. Third Point claimed Mr Thompson had exaggerated his CV with a degree in computer science from Stonehill College.
He did earn an accounting degree from Stonehill, a Catholic school near Boston, in 1979, a fact that Yahoo correctly lists, but did not earn a computer science degree.
Third Point's CEO, Dan Loeb, and two of the hedge fund's other nominees will join the Yahoo board. Five directors who had planned to leave later this year will now leave immediately. Interim CEO Mr Levinsohn is someone that Mr Loeb had suggested for the job.
In a statement issued through Yahoo, Mr Loeb said he was "delighted" to join the Yahoo board and promised to "work collaboratively with our fellow directors".
Yahoo dumped its previous CEO, Carol Bartz, in September, disappointed that she had not been able to increase revenue. When Mr Thompson came on board, he made big changes immediately. Co-founder Jerry Yang left the board in January. Mr Thompson announced a reorganisation and planned to lose 2,000 workers, or about 14% of the workforce
But Third Point, which had pushed for Mr Yang to leave and applauded Ms Bartz's dismissal, was still not satisfied. On May 3, it issued a press release with what turned out to be an explosive accusation: Mr Thompson had embellished his CV.
Privately, Mr Thompson told his colleagues that he was not responsible for the incorrect information and blamed a Chicago headhunting firm, Heidrick & Struggles.
In an internal memo last week, Heidrick & Struggles denied Mr Thompson's accusation. "This allegation is verifiably not true and we have notified Yahoo! to that effect," CEO Kevin Kelly wrote to employees.
Carlos Kirjner, a senior analyst at Sanford Bernstein, would not comment on whether Yahoo's board would be wise to oust Mr Thompson. But he did suggest that his previous job, as president of the fast-growing PayPal, had not prepared him for Yahoo.
"It is very different to be CEO of a growth company, making choices between opportunities, and to be CEO of a company in turnaround mode, whose parts are declining or losing share," Mr Kirjner said.
Mr Thompson's CV discrepancy might have been more forgivable at a company that was making money for shareholders, said James Post, a management professor at Boston University.
"Yahoo has been embattled for such a long time that there are a lot of people prepared to believe the worst about that company," said Prof Post, who specialises in corporate governance and professional ethics.
"When you're angry at the management and the board, when nothing's going right and you're losing money, it's understandable that shareholders would adopt an 'off with their head' attitude."