Activist shareholder Dan Loeb turned up the pressure on Yahoo today, when his shareholder firm Third Point demanded that Yahoo fire CEO Scott Thompson by Monday.
The revelation yesterday that Thompson does not have a computer science degree -- as claimed on his resume -- served as the latest jumping off point for ThirdPoint, which owns 5.8 percent of Yahoo shares, to demand change. ThirdPoint was the first to disclose the discrepancy. Thompson's degree was in accounting only. When he was hired as its CEO in January, Yahoo played up his technical chops at PayPal, where he had been chief technology officer.
"Mr. Thompson and the Board should make no mistake: this is a big deal," ThirdPoint said in its letter to the board at Yahoo. "CEO's have been terminated for less at other companies."
It also said that Thompson had lost credibility with the company's engineers, "many of which earned real -- not invented -- degrees in computer science." Allowing Thompson and Hart to remain at Yahoo "after apparently violating the Code of Ethics" would send a message to employees "that a different set of rules applies at the top," according to the letter.
The most delicious part of the public letter -- which also complains about "material inaccuracies" in the resume of Yahoo director Patti Hart's educational record -- threatens to "consider it grounds for further action" if Yahoo's board fails to take the following steps by noon Monday: (Cue Gary Cooper and "High Noon.")
- Publicly reveal the process by which it vetted Mr. Thompson as a potential CEO candidate. This disclosure should include the release of all minutes of any meeting at which Mr. Thompson's candidacy was discussed and any reports or other materials upon which directors relied to evaluate Mr. Thompson's candidacy.
- Disclose whether any Board member, including Maynard Webb, who has long-standing ties to Mr. Thompson, and Ms. Hart, who headed the Search Committee, was aware of Mr. Thompson's deception prior to receipt of Third Point's letter yesterday.
- Provide shareholders with all information regarding the director nomination process, including the so-called "skills matrix" referred to in the Company's preliminary proxy statement, which the Board purportedly used to determine the qualifications of various candidates, including Third Point's nominees.
- Terminate Mr. Thompson for cause immediately given his demonstrable unsuitability to remain Chief Executive Officer and a director of Yahoo! and accept the resignation of Ms. Hart for similar reasons.
- Finally, we urge the Board to stop wasting valuable company resources and drop its resistance to placing the Third Point nominees on the Board. We are prepared to join immediately. Once on the Board, our first tasks will be to work with the remaining Board members to find Yahoo! a new leader with the qualifications and integrity to lead the Company and install best practices of corporate governance. The Company can ill afford to continue this misguided fight with its largest outside shareholder while it has so many other fires to put out. There has been enough damage already.
Yesterday, Yahoo called the discrepancy an "inadvertent error." In a statement to All Things D, the company said: "In connection with the statement the company made earlier today about Scott Thompson, the Yahoo board will be reviewing this matter, and upon completion of its review, will make an appropriate disclosure to shareholders."