Thompson stepping down as Yahoo CEO
By Brian Womack,
Yahoo chief executive Scott Thompson, hired from eBay in January to turn around the struggling Web portal, is stepping down after it was discovered that his academic credentials were misrepresented, according to a person with knowledge of the matter.
Thompson will be replaced on an interim basis by Ross Levinsohn, head of global media at the company, based in Sunnyvale, Calif., said the person, who spoke on the condition of anonymity because the plans have not been made public.
Investment fund Third Point, which is seeking board representation because it says Yahoo is mismanaged, highlighted discrepancies in Thompson’s résuméon May 3 and had been increasing the pressure.
The departure of the company’s third chief executive in a little more than three years adds to an upheaval at the firm, which was once a leader in Web search and online information. Yahoo’s sales tumbled 31 percent last year from a peak three years earlier, while its market value dropped by more than half since the end of 2005. Thompson, 54, was brought in to stem management disarray and orchestrate a turnaround after Google nabbed market share in advertising and Facebook lured fans of social networking.
Thompson’s undoing stems from erroneous biographical references to a bachelor’s degree in computer science from Stonehill College. He earned a degree in accounting from the school, based in Easton, Mass., and the information is correctly listed in eBay regulatory filings and some Yahoo news releases. Yet the incorrect degree showed up in Yahoo’s April 27 10-K filing, as well as on the company’s Web site.
Yahoo Director Patti Hart, who was on the three-person committee responsible for his hiring, also is leaving the board. She announced her plans May 8, citing responsibilities as chief executive of slot-machine maker International Game Technology. Third Point had accused Hart of inflating her academic credentials.
Yahoo shares fell 1.6 percent, to $15.19, in New York on Friday. They have declined 5.8 percent this year.
Dana Lengkeek, spokeswoman for Yahoo, didn’t immediately respond to a request for comment. Thompson’s departure was previously reported by the technology blog AllThingsDigital.
Thompson, a former president of eBay’s PayPal unit, was hired in January to replace Carol Bartz, who was dismissed by the Yahoo board in September. He had cut 2,000 jobs and overhauled management, and Yahoo’s stock had its biggest rally in three months on April 18 after the company reported first-quarter sales that topped estimates, fueling optimism that turnaround efforts may take hold. A day earlier, Yahoo reported its first revenue gain in more than three years.
Third Point, the owner of about 5.8 percent of Yahoo, has been locked in a dispute with the company over its direction and appointments to the board, calling it one of technology’s “most mismanaged companies.”
The fund faulted Thompson in April for embarking on job cuts before he articulated a more complete strategy, and it criticized earlier management for not accepting a $44 billion takeover bid from Microsoft.
Yahoo named three new independent directors in March as part of an effort to shake up the board and appease investors. The company negotiated with Third Point’s Daniel S. Loeb about adding one of his nominees and another on whom both sides could agree. The discussions broke down when Loeb insisted that he be added, Yahoo said at the time. The fund announced plans in March to seek shareholder votes for its slate of four directors.
After the disclosure of the résuméerror, Yahoo formed a committee led by board member Alfred Amoroso, who joined in February.
The other directors on the panel are John Hayes and Thomas McInerney, both of whom joined in April. The committee has retained independent counsel, Terry Bird of Bird, Marella, Boxer, Wolpert, Nessim, Drooks & Lincenberg in Los Angeles.
The company initially called the discrepancy an “inadvertent error” and said 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.” It later said it would begin a review.
Thompson, in a memo to staff members May 7, apologized for the fallout from the disclosures and said he takes “full responsibility.”
“I want you to know how deeply I regret how this issue has affected the company and all of you,” Thompson said.
Thompson’s four months of work at Yahoo were lucrative, and his potential compensation was set at as high as $27 million when he joined. Besides an annual base salary of $1 million, he received a hiring bonus of $1.5 million in cash and $5.5 million in stock, according to Yahoo’s agreement letter filed with the Securities and Exchange Commission.
He also was set to receive an inducement equity award in February worth $5 million, regulatory filings show. He was eligible for incentive compensation of as much as twice his annual salary, depending on performance, with the bonus guaranteed to be least $1 million for the fiscal year.
Thompson was slated to receive an additional $1 million stock award in March 2013 and to get long-term equity grants that were projected by the company to be worth $11 million for 2012, according to the regulatory filing.
— Bloomberg News