Yahoo Inc. swept out Scott Thompson as chief executive on Sunday in an effort to clean up a mess created by an exaggeration about his education that destroyed his credibility as he set out to turn around the long-troubled Internet company.
Ross Levinsohn, head of content and advertising services, is taking over as interim CEO - the fourth person to run Yahoo in eight months.
Yahoo gave no official explanation for Thompson’s departure, but it was clearly tied to inaccuracies on Thompson’s biography on the company’s website and in documents filed with the Securities and Exchange Commission. The bio listed two degrees - accounting and computer science - from Stonehill College in Easton. Loeb discovered Thompson never got a computer science degree and exposed the fabrication May 3.
Yahoo hired Thompson, the former head of eBay’s PayPal unit, in January to orchestrate a reversal. Yahoo is one of the most-visited websites but has struggled to grow in the face of competition from Google and Facebook. Thompson took the helm as Yahoo’s fourth chief executive in less than five years.
His abrupt exit after just four months came as part of the latest shake-up on Yahoo’s board of directors, which has been in flux for months.
Chairman Roy Bostock and four other directors who had already announced plans to step down at the company’s annual meeting later this year are leaving immediately. Three of the spots will be filled by Daniel Loeb, the activist hedge fund manager who dropped the bombshell that led to Thompson’s departure; former MTV Networks executive Michael Wolf; and turnaround specialist Harry Wilson.
Alfred Amoroso, a veteran technology executive who joined Yahoo’s board three months ago, replaces Bostock as chairman.
Appointing new directors ends a potentially disruptive battle with Loeb, who was waging a campaign to gain four board seats. Loeb settled for three and the satisfaction of ushering out Thompson, who antagonized Loeb, who runs Third Point, in March by telling him he was not qualified for the board.
After the resume fabrication was revealed, Yahoo initially stood behind Thompson, citing an “inadvertent error.’’ But harsh criticism from employees, shareholders, and corporate governance experts prompted the board to appoint a committee to investigate.
Thompson, 54, who grew up in Raynham, sent a memo to employees to apologize for the distractions caused by the news coverage and sought to assure other Yahoo executives he was not the source of the inaccuracy. He blamed a Chicago headhunting firm, Heidrick & Struggles, which has denied Thompson’s accusation.
Thompson’s downfall leaves Yahoo in turmoil amid a reorganization that had only just begun. Last month, Thompson laid off 2,000 employees, or 14 percent of the workforce, and had started to identify about 50 services to close or sell.
Levinsohn joined Yahoo 18 months ago when it was still being run by Carol Bartz, who was fired in September because she had not developed an effective turnaround plan.
The resume fiasco has had a relatively limited effect on Yahoo’s stock price. Shares fell 1.6 percent to $15.15 on May 4, the day after Third Point unleashed the news about Thompson’s resume. They closed at $15.19 Friday. They’re up from their $14.44 close on Sept. 8 when Loeb sent his first missive to Yahoo’s board urging changes at the company.
But long term, the shares have fallen. They are down about 12 percent compared to a year ago. They’re down 46 percent from Feb. 1, 2008, when they soared almost 50 percent after Microsoft offered to buy the company for $31 a share. Yahoo’s board rejected the deal, saying it wasn’t enough. Four of the five directors who are leaving were on the board at that time. Yahoo’s stock hasn’t traded above $20 since September 2008.
Thompson’s inaccurate resume might have been more forgivable at a company that was posting big returns, said James Post, a management professor at Boston University. But it’s likely that Third Point was looking for an excuse to get rid of Thompson, Post said. “They’ve had expensive and talented investigators turning over every rock and pebble to find something they could use for leverage.’’
“When you’re angry at the management and the board,’’ he said, “when nothing’s going right and you’re losing money, it’s understandable that shareholders would adopt an off with their head’ attitude.’’
When Thompson was named Yahoo’s chief executive, the Rev. Mark Cregan, Stonehill’s president, said the school counted him as one of its most prominent graduates. Stonehill is a liberal arts college with 2,500 students that is known for its business program. A college spokesman declined to comment Sunday.