Skip to main content

Loeb: Yahoo CEO's Apology Clearly Insufficient

The latest entry into the Yahoo CEO scandal is a letter from Third Point CEO Daniel Loeb to Yahoo's Board of Directors. It's in response to Tuesday's reports that Director Patti Hart plans to step down from her position, and Yahoo CEO Scott Thompson's letter of apology to company employees. Essentially he wants both Hart and Thompson out now so that everyone can get past the "embarrassing episode."

His letter starts out with a brief summary of prior events: (1) shareholders were told that Thompson's bio errors were inadvertent; (2) Thompson made his apology to Yahoo staff; (3) Hart announced she will not seek re-election to the Board; (4) the Board has formed a special committee to conduct a "thorough review" into Thompson's academic credentials and the hiring process.

"It appears very clear to us -- and to many corporate governance experts, Yahoo! employees, and fellow Yahoo! shareholders -- that Mr. Thompson's fantasy degree was in no way an 'inadvertent error,'" Loeb writes. "The evidence shows he had been using false credentials for years.  Mr. Thompson's 'apology' was clearly insufficient and it seems that the only thing he actually regrets is that he has been caught in a lie and publicly exposed.  Without any explanation or accountability, Yahoo! has been left to flounder under a discredited leader for an undefined period.

"So, after six days, we must ask – what is this Board waiting for?"

As Loeb points out, hedge fund company Third Point has over $1 billion invested in Yahoo, or rather, holds 8-percent of Yahoo stock. Loeb understandably wants things to change immediately to prevent his share from losing value. But in his eyes, that means replacing Thompson and Hart without delay, and appointing an interim CEO -- possibly CFO Tim Morse or Head of Global Media Ross Levinsohn if they didn't play a part in Thompson's hiring. Third Point nominee Michael Wolf would Chair the Search Committee for a new permanent CEO, and waive the $15,000 Hart received for performing the same duty last year.

"It seems farcical to us that the Board will most likely spend more time deliberating over whether Mr. Thompson should be fired than it did properly vetting whether he should have been hired," Loeb writes. "The necessary investigation into whether certain senior executives and Board Members knew of Mr. Thompson's deceptions before hiring him should not delay decisive action over his ethical breaches."

Loeb also states that Thompson didn't take any responsibility for the whole faulty bio. What Thompson did say was that he took full responsibility for a mess that's creating a negative effect on Yahoo's progress as it struggles to move forward. What the apology lacked was admittance that he'd done anything wrong. "I am hopeful that this matter will be concluded promptly," Thompson said in a company-wide email, referring to the current investigation. "But, in the meantime, we have a lot of work to do."

The whole mess started when Thompson's shady credentials were found in Yahoo's regulatory filings. Loeb did some investigating and discovered that -- despite his resume -- Thompson never received a bachelor's degree in computer science because Stonehill College did not begin awarding computer science degrees until four years after Thompson graduated.