CEO’s ouster only adds to Yahoo’s tangled web

SAN FRANCISCO - Yahoo's dysfunctional turnaround efforts have morphed into a Silicon Valley soap opera, one that has taken another strange twist with the Internet company's ousting of CEO Scott Thompson just four months after his arrival.

Thompson's hasty departure ushers in a new cast of characters led by interim CEO Ross Levinsohn and New York hedge fund manager Daniel Loeb, whose sleuthing uncovered Thompson's misleading biography. With a 5.8 percent stake in the company, Loeb now gets even more leverage with three seats on Yahoo's 11-member board of directors. He and the rest of Yahoo's board will appoint one more "mutually agreeable" director, according to a Monday regulatory filing.

If Yahoo's saga is to end happily, the company's new leadership will have to develop a strategy to lure back Web surfers and advertisers who have been defecting to Internet rivals Google Inc. and Facebook Inc. At the same time, they will probably need to complete the complicated negotiations to sell part of the company's prized stake in China Alibaba Group.

Those objectives ranked high on Thompson's priority list, too, but a fictitious college degree that appeared on his official biography ended his brief tenure.

Another factor might have contributed to Thompson's short stay. Citing unnamed sources familiar with the matter, The Wall Street Journal reported that Thompson, 54, informed Yahoo's board last week that he has been diagnosed with thyroid cancer. Even so, Thompson was still scrambling to save his job last week as he deflected responsibility for a bio that included a college degree in computer science that he never received. Thompson graduated from Stonehill College, near Boston, in 1979 with a degree in accounting - not computer science.

The flap over academic credentials extended to Nevada.

International Game Technology Chief Executive Officer Patti Hart said May 8 she would not stand for re-election to her outside board position with Yahoo after her board performance and academic credentials were questioned, as well.

Hart, CEO of the Reno-based slot machine giant since April 2009, headed the search committee that selected Thompson.

A subsequent Yahoo internal investigation found that Hart's biographical information also misstated her academic credentials, describing a business administration degree with emphasis in marketing and economics as a degree in marketing and economics.

Incensed at initially being denied a seat on Yahoo's board, Loeb exposed the phantom degree this month.

In a sign that he was forced out, Thompson left Yahoo without a severance package, according to documents filed Monday with the Securities and Exchange Commission. He is also surrendering unvested stock awards valued at $16 million. Thompson will get to keep a $1.5 million cash bonus and restricted stock valued at $5.5 million that Yahoo paid him to compensate for benefits he gave up at his former job at PayPal, an online payment service owned by eBay Inc. Yahoo had been paying Thompson a $1 million annual salary, which could have been supplemented by a bonus of up to $2 million.

Yahoo's stock added 31 cents, or 2 percent, to close Monday at $15.50.