Yahoo fires CEO Scott Thompson
14 May 2012, 11:53
New York - Yahoo has swept out Scott Thompson as CEO in an effort to
clean up a mess created by a misleading résumé that destroyed his
credibility as he set out to turn around the long-troubled internet
Ross Levinsohn, a 48-year-old executive who oversees Yahoo's media and advertising services, is taking over as interim CEO.
lured Thompson away from eBay's PayPal in January to end a financial
funk that has depressed the company's stock for years.
Yahoo remains one of the internet's most-visited websites, the company's
financial and stock performance has suffered in the face of competition
from companies like Google and Facebook.
The company's foibles
have exasperated investors who have seen Yahoo go through four full-time
CEOs in less than five years without delivering on repeated promises to
revive its revenue growth.
exit after just four months came as part of the latest shake-up on
Yahoo's board of directors, which has been in a state of flux for
Yahoo chair Roy Bostock and four other directors
who had already announced plans to step down at the company's annual
meeting later this year are leaving the board immediately.
five of those directors signed off on the hiring of Thompson, a move
that made them all look bad by the recent revelation that they didn't
catch an inaccuracy that had been circulating about his educational
background for years.
Three of Yahoo's vacated board seats will
be filled by activist hedge fund manager Daniel Loeb, a disgruntled
shareholder who dropped the bombshell that led to Thompson's departure,
and two of his allies, former MTV Networks executive Michael Wolf and
turnaround specialist Harry Wilson.
Alfred Amoroso, a veteran
technology executive who joined Yahoo's board just three months ago,
replaces Bostock as chair. After all the changes have been finalised,
Yahoo will have 11 board members.
The appointment of the new
directors ends a potentially disruptive battle with Loeb, who was waging
a campaign to gain four seats on the company's board. Loeb wound up
settling for three board seats and the satisfaction of ushering out
Thompson, who antagonised Loeb in late March by telling him he wasn't
qualified for the board.
In a statement issued through Yahoo,
Loeb said he is "delighted" to join the Yahoo board and promised to
"work collaboratively with our fellow directors". Loeb's fund, Third
Point LLC, has invested about $1bn to build a 5.8% stake in Yahoo.
Yahoo gave no official explanation for Thompson's departure, it was
clearly tied to inaccuracies that appeared on Thompson's biography on
the company's website and in a recent filing with the Securities and
The bio listed two degrees - in accounting
and computer science - from Stonehill College, a small school near
Boston. Loeb discovered Thompson never received a computer science
degree from the college and exposed the fabrication in a May 3 letter to
The revelation raised questions about why the
accomplishment had periodically appeared on his bio in the years while
he was running PayPal, an online payment service owned by eBay.
initially stood behind Thompson, brushing off the inclusion of the
bogus degree as an "inadvertent error", but harsh criticism from
employees, shareholders and corporate governance experts prompted the
board to appoint a special committee to investigate how the fabrication
"Yahoo has a circuitous way of getting to the right
answer, but I believe they have gotten to it," said Stifel Nicolaus
analyst Jordan Rohan.
Thompson, 54, spent much of the past week
scrambling to save his job. He sent out a memo to employees to apologise
for the distractions caused by news of the illusory degree and then
sought to assure other Yahoo executives that he wasn't the source of the
inaccuracy. He blamed a Chicago headhunting firm, Heidrick &
In an internal memo last week, Heidrick & Struggles denied Thompson's accusation.
allegation is verifiably not true and we have notified Yahoo! to that
effect," CEO Kevin Kelly wrote to employees. On Sunday, a spokesperson
for the firm declined to comment.
Thompson's rapid downfall
leaves Yahoo in turmoil amid a reorganisation that had only just begun.
In April, Thompson laid off 2 000 employees, or 14% of the workforce, in
the biggest payroll purge in the company's history, and had started to
identify about 50 services that he wanted to close or sell.
it falls to Levinsohn, whom Thompson had promoted to a more prominent
role last week, to get Yahoo back on track. He joined Yahoo 18 months
ago when the company was still being run by Carol Bartz, who was fired
in September. Before coming to Yahoo, Levinsohn had won fans running Fox
Interactive, the internet arm of Rupert Murdoch's media empire at News