By Alexei Oreskovic
SAN FRANCISCO May 9 Yahoo Inc's
largest outside shareholder said the Internet company should
make its finance chief or head of media the interim chief
executive because of the controversy surrounding CEO Scott
Thompson's educational background.
Third Point, an activist hedge fund waging a bitter proxy
battle against Yahoo's board and which exposed inaccuracies in
Thompson's official biography last week, repeated its demand on
Wednesday that Yahoo fire Thompson and install four of its
hand-picked director candidates to the board.
Yahoo's board appointed a special committee to investigate
Thompson's background on Tuesday and review the "facts and
circumstances" surrounding the hiring of Thompson.
Yahoo acknowledged last week that Thompson, the former
president of eBay division PayPal, does not have a computer
science degree despite what was stated in his official company
biography and in regulatory filings with the U.S. Securities and
Ebay Inc CEO John Donahoe came to Thompson's
support on Wednesday, telling reporters at an event in Tokyo
that he hoped Thompson would "get through this," and that he was
"Scott's biggest fan," according to a report in Bloomberg News.
Donahoe said that eBay's regulatory filings when the company
hired Thompson were accurate.
The controversy has engulfed Yahoo in turmoil, raising
questions about the future of Yahoo's fourth CEO in five years
and the latest plan to revive the company's flagging revenue
In its first-quarter 10-Q filing with the SEC on Wednesday,
Yahoo acknowledged that "uncertainties" about Thompson and
questions about the company's "future direction" could hurt
business opportunities and make it difficult to attract
employees and business partners.
Yahoo fired its previous CEO Carol Bartz in September. And
the company has undergone multiple rounds of layoffs and
reorganizations in the last few years, including a plan to slash
14 percent of the workforce which Thompson announced in April.
Thompson sent an email to Yahoo's employees on Monday
apologizing for the fallout from the controversy and noting that
he hoped the board's review would be concluded promptly. But he
has not publicly addressed the discrepancy in his educational
Third Point CEO Dan Loeb said in a letter to Yahoo's board
on Wednesday that Thompson's apology was "insufficient," and he
chided Yahoo's board for not taking any "decisive action" in the
six days since the discrepancy in Thompson's educational
background was revealed.
"It seems farcical to us that the Board will most likely
spend more time deliberating over whether Mr. Thompson should be
fired than it did properly vetting whether he should have been
hired," Loeb wrote.
He recommended that Yahoo appoint Chief Financial Officer
Tim Morse or Ross Levinsohn, Yahoo's head of global media, to
the role of interim CEO, while one of Third Point's director
candidates be tasked with heading a search committee to find a
new permanent CEO.
Yahoo director Patti Hart, who led the search committee that
hired Thompson in January, announced that she would not seek
re-election to Yahoo's board on Tuesday, noting that she needed
to focus on her primary responsibilities as CEO of International
Shares of Yahoo closed 6 cents lower at $15.30 on Nasdaq.