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May 09, 2012

Yahoo will Investigate Inaccurate Resume of CEO as Pressure Mounts to Force Him out by Shareholder Activists

By Ed Silverstein, TMCnet Contributor

There is mounting shareholder pressure this week on Yahoo CEO, Scott Thompson to quit after just a few months on the post, but so far this week he withstood one attempted ouster by activist shareholders.

The shareholders have challenged the online biography for the CEO, which inaccurately said he received a college degree in computer science, according to a report from The Associated Press. The company initially called it an “inadvertent error.”

Meanwhile, shareholders from Third Point LLC, a hedge fund, want to see company records about Thompson’s hiring.

Third Point unsuccessfully tried to set a deadline of noon on Monday for Thompson to be fired because of “unethical conduct,” the Associated Press (News - Alert) reported.

Third Point also wants to get control of four seats on Yahoo’s board of directors. Third Point CEO, Daniel Loeb claims he and three colleagues – if they made it to the board – would be able to increase company revenue and its stock price, the AP said. Third Point also wants to see documents related to the naming of several current board members, the AP said.

In addition, the AP reports that specialists in business ethics and board governance say the mistake on the online resume could give reason for Thompson to leave the CEO’s post.

Meanwhile, Thompson has apologized to Yahoo employees for the resume issue, according to Reuters. "I want you to know how deeply I regret how this issue has affected the company and all of you," Thompson wrote in an email to employees, which was cited by Reuters (News - Alert). "We have all been working very hard to move the company forward and this has had the opposite effect. For that, I take full responsibility, and I want to apologize to you." 

The board is expected to undertake an independent review on the issues, Reuters adds. Yahoo says the inquiry will be overseen by three directors who joined the board after Thompson was hired, according to the AP.

"We believe that this internal investigation by the board must not be conducted behind a veil of secrecy and shareholders deserve total transparency," Loeb was quoted by Reuters.  Third Point has a 5.8-percent stake in Yahoo.

In addition, Adam Seessel, director of research at Martin Capital Management, called the move by Loeb a "head scratcher," Reuters said. "If it were normal times, this would warrant a dismissal," Seessel was quoted by Reuters. "But he's so new and the company is in such a sensitive spot."   

In a related matter, it was also reported on Tuesday that Patti Hart will not run for re-election to the Yahoo board, according to a statement on MartketWatch. Yahoo also had a shake-up on its board earlier this year, TechZone 360 reported.

Edited by Brooke Neuman
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