Patti Hart, the Yahoo director who headed the search committee that selected Scott Thompson as CEO, was supposed to be one of the board members staying on during a makeover. Instead, Hart, whose own credentials were questioned when activist shareholder Daniel Loeb unveiled Thompson’s claims of a degree he didn’t have, is leaving. The official reason: her own board asked her not to serve again.
Separately, the Yahoo board said it has appointed a three-person special committee to investigate its CEO’s academic credentials — you know, the kind of thing that’s supposed to happen before you appoint a CEO, not after. The committee’s mission:
To conduct a thorough review of CEO Scott Thompson’s academic credentials, as well as the facts and circumstances related to the review and disclosure of those credentials in connection with Thompson’s appointment as CEO.
All three members are independent directors new to the board: Alfred Amoroso is the chairman; John Hayes and Thomas McInerney are the other members. They’ve hired their own counsel, formal federal prosecutor Terry Bird. The timeline? The special committee and the board promise that they “appreciate the urgency of the situation” and handle the review “in an independent, thorough and expeditious manner.” This announcement comes five days after Loeb’s revelations and the promise of an investigation. Meanwhile, it looks like Yahoo’s leaders want to try a business-as-usual approach (whatever that is) while the inquiry goes on.
The official reason for Hart’s makes sense. Why wouldn’t the board of International Game Technology would prefer its CEO’s energies go toward running that company rather than co-starring in Yahoo’s latest soap opera? But Hart’s decision carries a lot more baggage than that. When Loeb went public last week with the allegation that Thompson could not have the degree in computer science claimed on his Yahoo bio and in SEC filings, Loeb also pointed to a claim in Hart’s bio that didn’t match her actual degree. Hart claimed a bachelor’s degree in marketing and economics from Illinois State University but her actual degree was in business administration.
Loeb was responding to Yahoo’s claim during a proxy battle that it had carefully vetted all of the possible candidates for the board and had determined that only one of his four candidates qualified — and he was not one of them. When Yahoo admitted an “inadvertent error” in Thompson’s bio, Loeb demanded his firing and Hart’s resignation by noon Monday. He didn’t get either.
But now he has Hart’s resignation, whatever the reason offered. He may yet get Thompson to leave or be fired but the Yahoo board appears to be doing everything possible to avoid another change in CEOs. Thompson is at the beginning of a major reorganization and is in the process of laying off 2,000 employees.
No comment from Loeb yet on Tuesday’s actions.