The battle for Yahoo has claimed its first scalp as Director Patti Hart announces she won’t seek re-election to the Yahoo board, accepting blame for the fact that newish CEO Scott Thompson was hired without conducting a background check noting that he was only pretending to have a computer science degree from Stonehill College.
The context here is that Yahoo has been struggling for a while and the hedge fund Third Point which owns a hefty share of the firm is trying to seize control from the current board, and put some different candidates in place. That controversy relates to some fundamental questions about business strategy, but the incumbent management team didn’t help itself when it turned out that its CEO had been lying about his college experience. A company in better financial shape or simply not embroiled in an ongoing proxy struggle might be able to shake something like that off. But for Third Point this is like a gift from heaven that they’ve been able to use to discredit the existing board. At the end of the day, the question of who did or did not graduate with which degrees from Stonehill College doesn’t have a great deal to do with the future of Yahoo, but if the board can’t perform a basic due diligence then it strengthens the argument that it’s the wrong team to safeguard shareholders’ interests. Hart led the search team for a new CEO after Carol Bartz got fired, so she’s taking the fall for this screwup.
The underlying misrepresentation is that Thompson had been saying on the website of PayPal (where he used to work) and then again in a Yahoo regulatory filing that he has a BA in computer science and accounting. In reality his degree is in business administration with an emphasis in accounting.