Yahoo, the US internet company, is facing a fresh leadership crisis following growing calls for its board to sack new chief executive Scott Thompson for overstating his educational achievements.
The calls on Friday came from experts on corporate ethics, who said the company had to act if Mr Thompson was found to have lied on his personal résumé, as well as from Third Point, a dissident investor that has led a revolt against Yahoo’s board.
The misstatement came to light on Thursday, when Third Point revealed that it had checked up on the claim that Mr Thompson had a degree in accountancy and computer science from Stonehill College in Massachusetts. Not only was his degree only in accountancy but the college had offered no more than an introductory course to computer science when he was there, Third Point disclosed.
Yahoo at first sought to brush off the revelation, putting the misstatement down to an “inadvertent error” and issuing a strong statement in support of its chief executive. It refused to say how the misstatement had occurred, how long it had been on Mr Thompson’s résumé or why its board had failed to uncover it when it hired him earlier this year.
Late on Thursday, however, with dissatisfaction building over its handling of the affair, the company reversed course and said its directors would look into the matter and reveal their findings to shareholders.
“A board has no choice but to remove [a chief executive] if there is reason to doubt their trustworthiness in a matter like this,” said Kirk Hanson, head of the Markulla Center for Applied Ethics at Santa Clara University, in Silicon Valley.
Echoing the call, Charles Elson, professor of corporate governance at the University of Delaware, said the failure also raised serious questions about the adequacy of Yahoo’s board, which is already in the spotlight as Third Point tries to rally shareholder support to overhaul its membership.
Dan Loeb, head of Third Point, denounced Yahoo’s initial attempt to brush off the matter as “the height of arrogance” and “insulting to shareholders”. In a letter to the company he added that Mr Thompson “cannot possibly have any credibility remaining with the all-important Yahoo engineers, many of which earned real – not invented – degrees in computer science.”
Third Point also called for the dismissal of Patti Hart, the Yahoo director who led the search that brought in Mr Thompson and whose own qualifications it also questioned. Ms Hart once claimed to hold “a bachelor’s degree in marketing and economics” but in fact holds a degree in business administration that does not include formal recognition in those specific subjects, it said.
Mr Thompson’s erroneous educational credentials were also included in official filings with the Securities and Exchange Commission last week, opening the way for a potential regulatory investigation of the affair.