Yahoo! major shareholder makes CEO and chairman quit

14^th May 2012

Abbie Cavendish

Abbie Cavendish

14 May 2012

The Chief Executive of Yahoo!, Scott Thompson, has stepped down following pressure from a key shareholder after controversy over his embellished CV.

Thompson claimed to have received bachelor’s degrees in both accounting and computer science from Stonehill College, Massachusetts, but it was discovered that the college didn’t start awarding degrees in computer science until after he graduated – meaning he holds only an accounting degree.

The Chief Executive of Third Point LLC, Dan Loeb, who owns 5.8% of Yahoo!’s shares, has been lobbying for Thompson’s dismissal, and wrote an open letter to the company criticising their methods of hiring.

Loeb, who is conducting a personal campaign to get himself hired by the company, said: “Should our concerns about Mr Thompson’s record be accurate, that would call into serious question whether the Board failed to exercise appropriate diligence and oversight in one of its most fundamental tasks.”

As well as Thompson’s resignation, Loeb has negotiated his own appointment to Yahoo!’s board along with that of media executive Michael J Wolf and so-called “turnaround guru”’ Harry Wilson. In exchange, Loeb will drop his campaign against Thompson.

In order to honour their agreement with Loeb, five of Yahoo!’s existing board members have had to step down immediately. Until Yahoo’s new board selects a CEO, the position will be taken by the company’s Global Head of Media, Ross Levinsohn.

Thompson, who had been in his job for less than five months, is the fourth CEO to step down from Yahoo! in the last five years. He left his job as President of PayPal in January to join the company, having previously worked at Visa and Barclays.

Thompson’s resignation comes as Yahoo! are struggling financially. Shares in the company have dropped by 3% since Loeb uncovered Thompson’s false CV, and have dropped by almost 19% in the past year.

Yahoo! has been taking part in negotiation recently to sell part or all of its 40% stake in Chinese internet company Alibaba, and it was announced in April that the company would be firing 2000 employees – or just under 15% of its workforce – to make savings.

Abbie Cavendish