Internet giant Yahoo! Inc. (YHOO) said Sunday that Chief Executive Officer Scott Thompson has resigned from the position and as a director of the company, effective immediately, following relentless calls from investors to fire him. The company named Ross Levinsohn, Yahoo's head of global media, to replace him in the interim.
The move comes after Thompson was found to have embellished his academic credentials, which "undermines his credibility as a technology expert" and "reflects poorly on the character of the CEO."
Hedge fund Third Point LLC's founder, CEO and activist investor Daniel Loeb, who is waging a proxy war to unseat Yahoo's board with his nominees, had revealed this in a letter to Yahoo's board more than a week ago.
Third Point is the largest outside shareholder of Yahoo and currently owns about 5.8 percent of the outstanding shares. Loeb also demanded Yahoo board terminate CEO Thompson by May 7.
According to Yahoo's SEC filings, the newly-hired CEO Thompson "holds a Bachelor's degree in accounting and computer science" from Stonehill College. However, Loeb found that Thompson graduated with a degree in accounting only, and not computer science.
Meanwhile, Third Point's investigation also found that Board Director Patti Hart, who chaired the CEO search committee, has discrepancy regarding academic background. Hart has since decided to quit and will not stand for re-election to Yahoo's board this year.
Yahoo also named Fred Amoroso as Chairman to replace Roy Bostock, who has stepped down from his role as non-executive chairman.
The moves are a part of a settlement agreement reached between the Yahoo board and Third Point to settle the pending proxy contest related to the company's 2012 annual meeting of shareholders.
Third Point has now agreed to vote its shares in support of Yahoo!'s nominees, which will include three Third Point nominees - Daniel Loeb, Harry Wilson, and Michael Wolf. All the three will join the Yahoo! Board, effective May 16.
"The Board is pleased to announce these changes and the settlement with Third Point, and is confident that they will serve the best interests of our shareholders and further accelerate the substantial advances the Company has made operationally and organizationally since last August," Amoroso said in a statement.
Loeb stated, "Harry, Michael and I are delighted to join the Yahoo! Board and work collaboratively with our fellow directors to foster a culture of leadership dedicated to innovation, excellence in corporate governance, and responsiveness to users, advertisers and partners."
Loeb had been pushing for four seats on Yahoo's board, including himself. But, Yahoo offered only three board seats to Third Point as part of the settlement agreement. Loeb's fourth nominees Jeff Zucker offered to step aside in order to "quickly facilitate a settlement" and "to avoid a prolonged proxy fight."
As part of an ongoing strategic review process that started in early September after Carol Bartz was fired as CEO by Yahoo board, it named PayPal's President Scott Thompson to take over as Yahoo's fourth CEO in five years in early January. Thompson has served as president of PayPal since January 2008.
The changes at the helm of the company is seen as a major victory for Loeb, who has been pushing for sweeping changes in Yahoo's board of directors and its leadership since September, and has been extremely critical of the board's mishandling of the Microsoft negotiations in 2008.
Loeb had in September alleged that Yahoo Chairman Bostock has been a destroyer of company value and indicated that he should have voluntarily resigned and followed the terminated hand-picked executive, Carol Bartz.
Meanwhile, Yahoo co-founder and former CEO Jerry Yang also resigned from its board and all other positions in mid-January.
YHOO closed Friday's regular trading session at $15.19, down $0.25 or 1.62% on a volume of 21.13 million shares. In the past 52-week period, the stock has been trading in a range of $11.09 to $16.99.
by RTT Staff Writer
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