New Yahoo CEO Scott Thompson has stepped down just months after starting in the role, citing health concerns. Irregularities were found in his CV submitted as part of his application for the role, which has seen shareholders calling for his resignation over the last week.
This follows the unceremonious phone sacking of Carol Bartz in just September of last year – which led her to call the board ‘doofuses’, and the ousting of founder Jerry Yang from the board.
Thompson had only been in the job since January.
Yahoo’s board, now looking a bit foolish, had formed a committee last week to review Thompson’s credentials and the vetting process that led to his selection as CEO. Thompson jumped the gun at the weekend and stepped down, the Wall Street Journal is reporting that he told the board that he has thyroid cancer.
Activist investor Third Point LLC (5.8% of shares) exposed the discrepancy in Thompson’s CV, which claimed that he a degree in Accountancy and Computer Science from Stonehill College in Easton Massachusetts. Computer Science wasn’t offered as a degree until 4 years after his graduation.
Despite Thompson’s claims of an error at Yahoo, it appears that this degree listing also appeared during his time at eBay as President of Paypal, in online websites and in historical press articles.
Yahoo on Sunday said yesterday that Thompson would be succeeded by Ross Levinsohn, a senior Yahoo executive who now becomes interim CEO.
This follows the mass resignation of five board members, including Chairman Roy Boystock, who is replaced by director Fred Amoroso. The others VJ Joshi, Arthur Kern and Gary Wilson and Patti Hart all claim they would not seek reelection for the next term.
Patti Hart in particular was taken to task last week. She oversaw the taskforce responsible for Thompson’s hiring. Third Point CEO David Loeb claimed that Hart had been embellishing her CV by claiming she has a Bachelor’s Degree in Marketing and Economics from Illinois State University. Loeb claims that she only has a degree in business administration.
Yahoo said in its response that Hart "holds a bachelor of science degree in business administration with specialties in marketing and economics from Illinois State University."
Third Point has long been attempting to get a member on the board, and now appears to have been successful – Loeb will replace Hart. He has brought another two Third Point directors with him, Harry Wilson and Michael Wolff.
Third Point is far from the only investor furious at the board’s performance over the last few years. The company’s value has collapsed since 2008, when Microsoft produced both friendly and hostile takeover attempts for the company, valuing it at around $44.6bn ($33 per share). Despite Microsoft CEO Steve Ballmer’s relentless pursuit of the company, then Yahoo CEO Jerry Yang felt that the offers undervalued the company. The company’s value collapsed shortly after, and several shareholders even considered suing the board for not representing their interests appropriately.
It has limped on since, muddling around in various ventures which has seen the company rapidly lose market share to supposed ‘rivals’ Google and Facebook. Yahoo now has a market cap of just $19bn ($15.5 per share). By way of comparison, Google’s market cap is now around $200bn, and Facebook is in the process of its IPO – expected to be somewhere in the region of $100bn.
Confusion as to what Yahoo actually does, other than sell online advertising and own photo-sharing site Flickr, have long frustrated investors who still are unsure as to whether the company is a search engine, a media hosting site, or a social media site. It isn’t particularly successful in any of these areas at the moment.
Bartz famously remarked upon her ascension to the top job in 2009 that she didn’t really understand what Yahoo was, and had to do research with customers to redefine the company. The answer remains somewhat murky.
The identity crisis continued this year, as Thompson proceed in his plan to reorganise the company as earnings slumped. As well as culling some 40 products, he sacked 2000 members of Yahoo’s workforce (14%) – this caused a mass exodus of high level Yahoo staff. Its Chief Product Officer Blake Irving then resigned, as did Andrei Broder, VP of computational advertising and chief scientist of the Advertising Product Group, as well as Jianchang Mao, who headed advertising sciences.
This followed the departures of Yahoo! Labs head Prabhakar Raghavan who went to Google, and Raghu Ramakrishnan, who went to Microsoft to head its Information Services Lab. In perhaps the most visible show of change, former CEO and founder Jerry Yang left two weeks after Scott Thompson’s appointment.
