A disgruntled Yahoo shareholder questioned the qualifications and integrity of the recently hired CEO after exposing a misrepresentation about the executive's education.
The fabrication confirmed Thursday by Yahoo Inc. gives a New York hedge fund manager more artillery as he tries to topple a board of directors favored by the CEO, who became CEO of the troubled Internet company four months ago.
The hedge fund Third Point owns a 5.8% stake in Yahoo, and its manager has now gained more leverage since the discovery that the new CEO doesn't have a bachelor's degree in computer science from a small college in Easton, Massachusetts, as Yahoo stated in a regulatory filing last week.
Instead, he only has an accounting degree from Stonehill College, an accomplishment that Yahoo also listed in the filing. The accounting degree was the only one listed in a resume last year by eBay Inc. when he was still running that company's PayPal payment service. He graduated in 1979, according to Stonehill's website.
Yahoo confirmed the credentials had been exaggerated in the recent filing with the Securities and Exchange Commission. The company, which is based in Sunnyvale, California, brushed off the distortion as an inadvertent error.
But the misinformation was called out as a violation of Yahoo's code of ethics and called for an independent investigation to determine whether Thompson had misled the company's board about his technology credentials. It was also cited the mix-up as an example of Yahoo's poor corporate governance.
If his academic credentials were embellished, the investors 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. Now more than ever Yahoo investors need a trustworthy CEO.
In the past, other companies have suspended or fired executives who were caught lying on their resumes.
Yahoo hired their new CEO to reverse years of financial lethargy that set in at the company even as more advertising shifted to the Internet. The funk has weighed on Yahoo's stock, which has been hovering between $10 and $20 for most of the last three years. Yahoo shares fell 27 cents to close at $15.40 on Thursday. That's well below the $33 per share that stockholders could have gotten in May 2008 if the board had accepted a takeover offer from Microsoft Corp.
The company stood behind their new CEO in its statement. Stating that this discovery in no way alters that fact that he is a highly qualified executive with a successful track record leading large consumer technology companies. Under this new leadership, Yahoo is moving forward to grow the company and drive shareholder value.
Tensions have escalated since late March when Yahoo appointed three new directors to its board. In doing so, Yahoo snubbed the accusing hedge fund manager, who had been lobbying for a board seat along with three allies who he believes have the skills necessary to help Yahoo rebound from its long-running struggles. At the time, the CEO made it clear that he and the Yahoo committee overseeing the search for new directors had concluded that he wasn't the best candidate.
The disgruntled hedge fund manager is attempting to wage war, and has also sought to discredit another Yahoo director. In this case, the director is the one responsible for recommending Yahoo's new appointments to the board. He has also attacked her educational background, stating that it is incorrect to say that she holds a bachelor's degree in marketing and economics from Illinois State University. In its response, Yahoo clarified Hart received a bachelor's degree in business administration with specialties in marketing and economics.
The new CEO has mostly cut costs to boost profits since taking over as Yahoo's CEO. Last month, he laid off about 2,000 employees, or 14% of the workforce, in the biggest payroll purge in Yahoo's 17-year history. He also disclosed plans to close about 50 Yahoo services that haven't been attracting enough users or generating enough revenue.
He has made modest progress on other financial fronts. Yahoo registered its first year-over-year increase in quarterly net revenue since 2008 during the three months ending in March.
Even though he doesn't have a computer science degree, he does have a background in technology. He served as PayPal's chief technology officer for three years before being promoted to the payment service's president in 2008. He also previously worked as chief technology officer at credit- and debit-card processor Visa USA.
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