Yahoo (YHOO) is under pressure from Third Point, one of its largest investors, to dismiss Chief Executive Scott Thompson after his academic computer science credentials were misrepresented.
Third Point, which is fighting for representation on Yahoo's board amid concern the company is being poorly managed, said Yahoo should "terminate Mr. Thompson for cause immediately."
The investor highlighted discrepancies in Thompson's educational credentials Thursday, and Friday complained that Yahoo isn't responding adequately. The dispute adds to challenges facing Yahoo, which hired Thompson from eBay's (EBAY) PayPal unit in January after firing his predecessor, Carol Bartz. Thompson has cut about 2,000 jobs and overhauled management to revive growth and stem customer losses to Google Inc. and Facebook Inc.
"It is so clear-cut whether one has a degree or not that it is a deliberate lie and the only reason to do it is to misrepresent yourself," said Janice Bellace, professor of legal studies and business ethics at the Wharton School at the University of Pennsylvania. "The board should certainly be looking at his capacity to lead the company and the example he sets for others in the company."
While Thompson lists a bachelor's degree in computer science from Stonehill College, the school didn't begin offering such a degree until four years after he graduated, Third Point CEO Daniel Loeb said yesterday in a letter to the board. Thompson has an accounting degree from the school.
Yahoo's board plans to review the matter, and will later "make an appropriate disclosure to shareholders," the company said in a statement late yesterday.
Yahoo had earlier called the discrepancy an "inadvertent error" and said it "in no way alters that fact that Mr. Thompson is a highly qualified executive with a successful track record leading large consumer technology companies."
Third Point, the owner of about 5.8 percent of Yahoo, announced plans in March to seek shareholder votes for its slate of four directors. Yahoo has been struggling to keep pace with rivals Google and Facebook, which have lured away users and ad dollars. Third Point has demanded changes at Yahoo, calling it one of technology's "most mismanaged companies."
In his letter yesterday, Loeb said that Stonehill only had one computer-science course when Thompson attended the Boston- area school. "Presumably, Mr. Thompson took that course," he said.
Martin McGovern, a spokesman for Stonehill in Easton, Massachusetts, said that Thompson received a bachelor's of science in business administration, with a major in accounting on May 20, 1979. He declined to comment further.
Thompson's biography from his time at PayPal, as submitted to events such as the 2009 Web 2.0 Summit, also stated that he had a degree in computer science. Anuj Nayar, a spokesman for PayPal, said that in recent eBay filings, Thompson's degree was listed correctly.
"Under Mr. Thompson's leadership, Yahoo is moving forward to grow the company and drive shareholder value," Sunnyvale, California-based Yahoo said in its first public statement on the matter yesterday.
Loeb said that Patti Hart, a Yahoo board member who chairs the search committee, inflated her degree too. Hart, who also serves as CEO of International Game Technology (IGT), is listed in filings as holding a "bachelor's degree in marketing and economics" from Illinois State University, Loeb said. "However, we understand that Ms. Hart's degree is in business administration. She received a degree in neither marketing nor economics."
Yahoo said in its response that "Patti Hart holds a bachelor of science degree in business administration with specialties in marketing and economics from Illinois State University."
Jay Groves, a spokesman for Illinois State, corroborated the business administration degree, saying she graduated in 1978 with a concentration in economics and marketing.
Third Point faulted Thompson last month for embarking on a round of job cuts before he articulated a more complete strategy. Thompson took over as Yahoo's CEO in January.
Yahoo named three new independent directors in March, part of its own effort to shake up the board and appease investors. The company had negotiated with Third Point's Loeb about adding one of his nominees and another that both sides could agree on. The discussions broke down when Loeb insisted that he himself be added, Yahoo said at the time.
"If misrepresentations were made, they would confirm yet again that Yahoo is in dire need of a complete corporate governance overhaul," Loeb said yesterday. "As we have asserted repeatedly and forcefully, as Yahoo's largest outside shareholder and a voice for our fellow investors, we believe the Yahoo board requires fresh, outside perspectives from individuals who have no connection to a failed regime and have the expertise to address the serious challenges facing the company."
