Yahoo shareholder demands records08/05/2012 - 07:06:32
A major Yahoo shareholder has made a legal demand for internal records about the embattled internet company’s hiring of chief executive Scott Thompson.
Activist hedge fund Third Point took the unusual step as part of its effort to oust Mr Thompson for an inaccuracy about his academic credentials.
Even before he joined Yahoo four months ago, Mr Thompson’s biography has periodically listed a bachelor’s degree in computer science that he never received. The exaggeration was most recently repeated in an April 27 filing with the US Securities and Exchange Commission.
After exposing the fabrication last week, Third Point set a noon US time deadline yesterday for Yahoo to sack Mr Thompson for unethical conduct. That deadline passed without any change in his status.
Several experts in corporate ethics and board governance have said the deception regarding Mr Thompson’s education probably merits ending his short reign as CEO.
The push to get him sacked is unfolding against the backdrop of Third Point’s campaign to gain four seats on Yahoo’s board. Daniel Loeb, who runs Third Point, believes he and three allies could help boost Yahoo’s revenue and long-sagging stock price if they were appointed to the board.
Third Point wants to review Yahoo documents that may explain how much research the company’s board did about Mr Thompson before employing him in January. The fund says it is entitled to the records under the laws of Delaware, where Yahoo is incorporated.
Yahoo, based in Sunnyvale, California, did not respond to requests for comment.
After initially brushing off the misinformation as an “inadvertent error”, Yahoo’s board decided to open an investigation into the circumstances that led to the computer science degree being including on Mr Thompson’s biography. Yahoo has promised to share its findings with shareholders when the board completes its inquiry.
Third Point, which has invested about a billion dollars to acquire a 5.8% stake in Yahoo, wants to do its own digging into what happened. Besides demanding the internal records leading to Mr Thompson’s hiring, Third Point is seeking documents on the selection of six directors.
Five of them have been appointed since Yahoo took on Mr Thompson – Peter Liguori, John Hayes, Thomas McInerney, Maynard Webb and Fred Amoroso.
Third Point also wants records about the appointment of Patti Hart to the board in 2010. Ms Hart led the committee in charge of the search for new directors after co-founder Jerry Yang resigned from Yahoo’s board in January and four other members announced they would step down later this year.
Third Point also wants Ms Hart to resign from the board because of an inaccuracy that the hedge fund uncovered on her biography, which claimed she held a bachelor’s degree in marketing and economics.
After being confronted by Third Point, Yahoo clarified that she graduated from Illinois State University with a bachelor’s degree in business administration with specialities in marketing and economics.
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