Yahoo’s CEO takes a credibility hit in proxy battle

However it happened, Scott Thompson made it through multiple high-level jobs without a challenge to his claim of a bachelor’s degree in accounting and computer science from Stonehill College. Then the new CEO of Yahoo ran into activist investor Daniel Loeb.

The CEO of hedge fund Third Point, which is the largest institutional investor, is waging a proxy battle with Thompson and Yahoo directors over seats on the board. Wednesday, Thompson stressed a lack of qualifications for Loeb and some of his candidates to be on the Yahoo board. Loeb went public Thursday afternoon with the allegation that Thompson couldn’t have a computer science degree since it wasn’t offered when he went to Stonehill. Yahoo admitted to an “inadvertent” error and removed the offending line from Thompson’s online bio and promised a probe.

It’s going to be a lot harder to make the problem disappear.


Loeb sent a letter to Yahoo, filed it with the SEC and posted it on a site set up to tell Third Point’s side during the proxy fight:
Upon recognizing this discrepancy, Third Point initially assumed that the documents we had reviewed were incorrect and the representations in Yahoo!’s public filings were accurate. However, we were then informed by Stonehill College that Mr. Thompson did indeed graduate with a degree in accounting only. Furthermore, Stonehill College informed us that it did not begin awarding computer science degrees until 1983 — four years after Mr. Thompson 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. 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.
(A small piece of advice for Loeb: as a favorite editor of mine says, “Assume nothing, presume nothing.”) 

Wait, there’s more

Loeb also made a revelation about Patti Hart, the board member who headed the search committee that recommended Thompson. Turns out she had claimed a  “Bachelor’s degree in marketing and economics” from Illinois State University; her actual degree was in business administration. 

When he was at eBay, filings with the SEC described Thompson’s credentials accurately, even while his company bio included he computer science degree. At Yahoo, it was included in the bio filed as part of the proxy statement – as was Hart’s. That elevates the potential problem to one of filing misinformation with the SEC. Either way, it appears to to be a clear violation of Yahoo’s code of ethics:
Disclosure in reports and documents filed with or submitted to the U.S. Securities and Exchange Commission and in other public communications made by Yahoo! must be full, fair, accurate, timely and understandable
Loeb demanded an investigation, suggested that Thompson and Hart both be removed if there aren’t good explanations, and pushed again for a change to the board before the yet-to-be-scheduled annual meeting. Loeb is demanding four seats on the board, including one for himself. The other candidates proposed by Third Point are former NBCU CEO Jeff Zucker,  McKinsey/Viacom alum Michael Wolf and corporate turnaround expert Harry J. Wilson. Yahoo agreed to seats for Wilson and a second mutually agreed-on candidate but rejected Loeb. In a letter to shareholders filed Wednesday, Yahoo said:
The board continues to believe that Mr. Loeb himself does not bring the relevant skill set and experience to the board, particularly in comparison to the candidates selected by the board. In addition, we believe that, based on the specific qualifications of Third Point’s nominees relative to Yahoo!’s business and opportunities, the candidates nominated by the board’s Nominating and Governance Committee are significantly superior to those proposed by Third Point.

No one at Yahoo needs another distraction

This wave of allegations and revelations comes as Thompson’s reorganization kicks in. Last month, he sliced 2,000 jobs from the payroll and announced a new setup that took effect May 1. Despite Loeb’s complaints, it appeared as though Thompson was on track to follow through. 
Whatever comes next, Thompson’s tenure has a tarnish on it now.  That’s led to instant speculation …
Isn’t it inevitable that Yahoo’s Scott Thompson will be Apothekered within the next few days?Harry McCracken
How Did Yahoo CEO Go a Decade With "Inadvertent Error" on His Resume?The gut instinct for many people looking at news that Yahoo CEO Scott Thompson listed a degree he does not hold on his resume is that it’…
If Scott Thompson claims someone at eBay padded his resume 6 yrs ago & he was careless in not noticing, I will scream bloody murder $ YHOOEric Jackson
and outright calls for his departure.
Cooking The Books: Yahoo CEO Scott Thompson’s CS Degree “Error” Should Cost Him The Job"You guys might want to cover this before he resigns tomorrow," one hardcore reader emailed in this evening. And yes indeed, newish Yahoo…
The Disgrace Of Yahoo"The visionary lies to himself, the liar only to others." – Friedrich Nietzsche Yahoo CEO Scott Thompson has lied about receiving a compu…

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

  • Social media in Q1: commerce and discovery dominated
  • How to navigate the new world of digital advertising
  • Controversy, courtrooms and the cloud in Q1