* Yahoo CEO Thompson apologizes to employees in email
* Yahoo board expected to discuss internal review - source
* Activist investor Loeb demands access to hiring records
By Poornima Gupta and Alexei Oreskovic
SAN FRANCISCO, May 7 Yahoo Inc's board
convened on Monday afternoon to discuss the mounting upset
surrounding Chief Executive Scott Thompson, who has apologized
to employees after being accused last week by activist investor
Daniel Loeb of padding his resume, a source with knowledge of
the matter said.
The source, who declined to be identified because of the
sensitivity of the issue, said the board meeting was expected to
address aspects of an internal review, including which board
members would participate.
Thompson issued an apology for the fallout from disclosures
about his academic credentials in an emailed memo to Yahoo
employees on Monday, a copy of which was seen by Reuters.
The memo came hours after Loeb, chief executive of hedge
fund Third Point, which holds 5.8 percent of Yahoo's shares,
formally demanded in a letter that the Internet company turn
over all records related to Thompson's hiring.
"I want you to know how deeply I regret how this issue has
affected the company and all of you," Thompson wrote in his
first extended memo to employees since the disclosures emerged
on May 3. "We have all been working very hard to move the
company forward and this has had the opposite effect. For that,
I take full responsibility, and I want to apologize to you."
Thompson added that he would "respect" the board's plans to
conduct a thorough and independent review.
"I am hopeful that this matter will be concluded promptly,"
he wrote. "But, in the meantime, we have a lot of work to do."
Yahoo, whose revenue slid by more than a fifth last year,
brought in Thompson, former president of eBay Inc
subsidiary PayPal, as chief executive in January, five months
after Carol Bartz was fired.
Third Point, which last week revealed the discrepancies in
Thompson's education record, wants Yahoo to publicly reveal the
process by which Thompson was vetted and disclose all minutes of
any board meeting in which his candidacy was discussed.
Yahoo's board has said it is investigating the issue.
"We believe that this internal investigation by this board
must not be conducted behind a veil of secrecy and shareholders
deserve total transparency," Loeb said in his latest letter on
Loeb cited Delaware corporation law that allows a
shareholder to inspect a company's books if that person has a
proper purpose and meets procedural requirements.
Loeb started out as a trader. He opened shop in 1995 with
just $3.3 million in assets under management and operated in
space borrowed from David Tepper's Appaloosa Management, a New
Jersey-based hedge fund.
Yahoo's latest troubles come as it is likely weeks away from
selling 15 to 25 percent of Alibaba Group's shares
back to that company after months of negotiations. The deal with
Alibaba, parent of China's largest listed e-commerce company
Alibaba.com Ltd, is expected to be designed to avoid
the complexities that had hindered earlier talks, a source told
Reuters last week.
Loeb has been credited with sparking previous changes on
Yahoo's board, namely the resignations of co-founder Jerry Yang
and former chairman Roy Bostock.
Yahoo's board has come under fire from investors impatient
with the company's persisting inability to effect a turnaround,
and indecisiveness over how to handle its investments in
Adam Seessel, director of research at Martin Capital
Management, which owns Yahoo shares, said that while he was a
fan of Loeb, the move by the hedge fund chief executive to oust
Thompson was a "head scratcher".
"If it were normal times, this would warrant a dismissal,"
Seessel said of Thompson's padded resume. "But he's so new and
the company is in such a sensitive spot."
"Sometimes in the heat of the battle, you can't get rid of
your commander ... and a battle is going on."
Shares in the company were flat in after hours trade after
closing at $15.35 on the Nasdaq.