Third Point CEO Daniel Loeb seems to have gotten just about everything he could want from the settlement agreement with Yahoo, disclosed today in an SEC filing. Yahoo agreed to pay Third Point $4M to compensate …
UPDATE, 12:31 PM: The Wall Street Journal is reporting that Yahoo CEO Scott Thompson told the board over the weekend that he has been diagnosed with thyroid cancer. The WSJ says the disclosure might have impacted the company’s decision to accept Thompson’s resignation. The report adds that Thompson began telling colleagues as early as Friday that he was stepping down. Meanwhile, CNNMoney is reporting that Thompson could owe up to $7 million in upfront bonus money he received when he was hired in January.
PREVIOUS, SUNDAY PM: It’s official: Thompson’s four-month reign is over, following the disclosure that he misrepresented his bachelors’ degree. He “has left the Company,” Yahoo says — and the board has a deal with Third Point CEO Daniel Loeb, who has abandoned his proxy fight. Ross Levinsohn replaces Thompson as interim chief executive “effective immediately.” Roy Bostock has stepped down as Non-Executive Chairman, replaced by Fred Amoroso. In addition, hedge fund manager Loeb and two allies — media consultant Michael Wolf and restructuring expert Harry Wilson — will join the board on Wednesday. Former NBCUniversal CEO Jeff Zucker won’t be with them. With only three board seats going to Loeb’s group, Zucker says he agreed to step aside “to quickly facilitate a settlement.”
Here’s the announcement:
Things are still in flux — the Yahoo board is meeting this morning to discuss, AllThingsD reports. Still, the ability of hedge fund manager Daniel Loeb to force Yahoo’s hand raises big questions about the company’s strategic direction. For …
Third Point CEO Daniel Loeb, who controls 5.8% of Yahoo’s shares, continues to punch away at the Yahoo board — which seems to already be on the ropes following the disclosure that Thompson misrepresented his bachelor’s degree. This morning Loeb sent directors a letter urging them to place himself and three colleagues (including former NBCUniversal chief Jeff Zucker) on Yahoo’s board. He wants them to name an interim CEO to replace Thompson. And he wants one of his allies, media consultant Michael Wolf, to chair a search committee to find a full time replacement. “Third Point has over $1 billion invested in Yahoo! and we take no joy in witnessing this carnage,” Loeb writes. “This Board’s unchecked value destruction must stop once and for all.”
UPDATE, 12:40 PM: Yahoo‘s board has announced it has formed a special committee to review CEO Scott Thompson’s academic credentials and how they were disclosed during the hiring process. It has brought on an independent counsel …
This is the next shoe to drop after the board didn’t go along with the demand by Third Point chief Daniel Loeb to fire Yahoo CEO Scott Thompson by noon ET today. The hedge fund manager. who controls 5.8% of Yahoo shares, says that Delaware General Corporation Law entitles him to inspect books and records beginning September 1 tied to the board’s decision to hire Thompson, as well as other material that would shed light on the naming of directors Patti Hart, Peter Liguori, John Hayes, Thomas McInerney, Maynard Webb Jr, and Fred Amoroso. The dissident shareholder has hired law firms Willkie Farr & Gallagher and Bouchard Margules & Friedlander to conduct the inspection on his behalf.
UPDATE, 12:45 PM: Here’s Yahoo’s response to Daniel Loeb: “As we have previously said, the board is reviewing this matter and, upon completion of its review, will make an appropriate disclosure to shareholders.”
PREVIOUS, 12:11 PM: Third Point CEO Daniel Loeb, who owns 5.8% of Yahoo‘s stock, made his demand following the revelation yesterday that the company’s proxy and web site inaccurately described Thompson’s college credential. Yahoo said that he had a bachelor’s degree in accounting and computer science from Stonehill College. But it acknowledged that it made an “inadvertent error” after Loeb checked and discovered that the school didn’t offer a computer science major when Thompson graduated. Loeb says today, in a letter to the board, that the company’s response was “the height of arrogance” — belittling the likelihood that Thompson misrepresented his qualifications, and that the board didn’t double check his information. “Mr. Thompson and the Board should make no mistake: this is a big deal,” Loeb says. “CEOs have been terminated for less at other companies.” He wants the board to fire Thompson “for cause immediately given his demonstrable unsuitability to remain Chief Executive Officer and a director of Yahoo!” If that’s not done by noon ET on Monday,
This isn’t a huge scandal, but it does provide Third Point CEO Daniel Loeb — who owns 5.8% of Yahoo shares — with some fodder for his campaign to shake up the company’s board. It seems that Yahoo’s draft proxy statement and web site say that CEO Scott Thompson earned a bachelor’s degree from Stonehill College in “accounting and computer science.” But Loeb says in a letter today to the board that when he checked, ”Stonehill College informed us that it did not begin awarding computer science degrees until 1983 — four years after Mr. Thompson graduated.” Loeb adds that if Thompson “embellished his academic credentials we think that it 1) undermines his credibility as a technology expert and 2) reflects poorly on the character of the CEO who has been tasked with leading Yahoo! at this critical juncture.”
Yahoo admits that “there was an inadvertent error that stated Mr. Thompson also holds a degree in computer science.” His degree is in business administration with a major in accounting. “This in no way alters that fact that Mr. Thompson is a highly qualified executive with a successful track record leading large consumer technology companies,” Yahoo says.
UPDATE, 3:10 PM: Scott Thompson gave analysts fair warning that they’re in for a roller-coaster ride while he deals with the rot he found at Yahoo after he landed the top job in January. Following his recent 2,000 layoffs, Thompson says he plans to pull the plug on some unnamed technologies, consolidate several business lines, and focus R&D on Yahoo-owned businesses as opposed to initiatives like the one to create platforms for outside publishers. The company “has been doing way too much for too long and has only been doing a few things really well.” Thompson added that Yahoo needs to be “clearer going forward about what we won’t do”, noting that the company “had way too many people for the output” from its businesses. He offered few specifics about what he wants to do, but said while Yahoo doesn’t have to re-invent itself he intends to ”re-invent the experiences our users have” with its most popular websites and services. Notably, Yahoo has to “get good real fast” in mobile services and devices. “Over time we will earn the right to pursue new growth opportunities.”
There’s one more corporate casualty at Yahoo following this week’s 2,000 layoffs: Chief Product Officer Blake Irving, whose operation was hit hard by the sackings, resigned. He opposed CEO Scott Thompson’s decision to let 14% of the company’s workforce …
UPDATE: New Yahoo CEO Scott Thompson Joins Strategic Review Effort As Company Vows To Stay Publicly Traded
UPDATE, 7:35 AM: Chairman Roy Bostock said in a conference call that Yahoo handed the CEO job to Scott Thompson, a technology guy from PayPal, instead of to a turnaround or media specialist because “the key to success in advertising is providing a great customer experience.” He added that ”Scott knows how to reach out to [advertisers] and learn what they need and what they want.” Bostock wouldn’t discuss Yahoo’s strategic review — except to note that “the primary focus will be on the core business” and that Thompson will be part of the review process. Bostock did say, though, that he expects Yahoo to remain publicly traded. The possibility of going private “is a moot issue as far as I’m concerned.”
As one might expect, the new CEO stuck with broad generalities. “It’s too early for me to have any informed opinions” about the display ad business, Thompson said. His top priorities will be to “grow shareholder value and top-line growth.” Yahoo’s “core assets are stronger than people believe.” Thompson plans to study usage statistics. “Down in the data we’ll find ways to compete and innovate that the world hasn’t seen yet.” He says the changes in the Web over the next five years are “hard to imagine,” but “we’ll be back to innovation and disruptive content” including on mobile devices.
PREVIOUS, 6:19 AM: Yahoo has been driving to become one of the Web’s leading ad-supported content providers, but it turned the top job over to an executive with a deep resume in technology. Scott Thompson was PayPal’s Chief Technology Officer before becoming its President. Before that he was EVP technology solutions at Inovant, a Visa subsidiary that oversees the company’s global technology. He also was Chief Information Officer of Barclays Global Investors, and worked with Coopers and Lybrand to help provide information technology to financial services companies.