Yahoo has cancelled up to $19m worth of stock options, bonuses and salary that its former chief executive Scott Thompson was likely to receive this year, adding to the impression he was forced out of the company as a result of the scandal surrounding his inflated educational qualifications.
The hasty settlement reached with Mr Thompson over the weekend has left him with $8m of cash and stock that Yahoo promised as an inducement for him to leave former employer PayPal. All but $2.5m of that was guaranteed and Yahoo waived the right to try to reclaim the rest, according to terms disclosed in a Securities and Exchange Commission filing late Monday.
News that Mr Thompson did not receive the sort of pay-off normally seen when US chief executives are forced out of their jobs came as it emerged that he told Yahoo’s board late last week that he was suffering from thyroid cancer.
The diagnosis was one of the issues that came into play as he negotiated his severance from the company. However, he revealed the news only after the board had already decided it needed a change in leadership, according to one person familiar with the situation.
Yahoo refused to discuss details of the case and Mr Thompson could not be reached for comment.
With Mr Thompson appearing to receive nothing except his so-called “make-whole” inducements for leaving PayPal, “it’s a harsh judgment”, said Kirk Hanson, a professor of corporate ethics at Santa Clara University.
The severance agreement was reached on Saturday, before Yahoo’s own investigation into the scandal had been completed. The terms did not include any reference to whether or not Mr Thompson had been ousted “for cause”, the test that had been laid down in his employment contract to determine whether or not he should receive a pay-off.
However, the fact that his negotiated departure required him to give up his stock awards and other benefits suggested that the board had held him responsible, said Mr Hanson. American boards often settle rather than risk a legal battle with outgoing chief executives.
Had he stayed, Mr Thompson would have been entitled to a $1m salary and a target bonus of $2m. He could also have expected a stock inducement award of $5m and incentive stock options of $11m, according to the terms reached when he joined Yahoo in January.
Yahoo has yet to give a full account of Mr Thompson’s dramatic departure, which came 10 days after it was revealed that he held an undergraduate degree only in accounting, not the joint degree in accounting and computer science that had been claimed on his résumé.
The company’s board, which was already operating under the glare of Wall Street’s attention amid a fight with dissident investors, is still planning to publish the account of its internal investigation, according to a person familiar with its plans.