AllThingsD » regulatory

Here's the Official Yahoo Filing on Alibaba Deal

Kara Swisher — Thu, 24 May 2012 21:34:20 +0000

I am a bit sleepy and getting ready for our 10th D: All Things Digital conference next week, so you are going to have to read for yourself this short regulatory filing Yahoo just made about its recent deal to sell half of its large stake in China’s Alibaba Group for about $7 billion.

The deets were all reported here earlier, but knock yourself out if you want more:

YHOO-20120524-8K-20120520

Former CEO Thompson Might Be Gone, But Internal Investigation Into ResuMess Still a Hot Potato at Yahoo

Kara Swisher — Tue, 22 May 2012 16:03:16 +0000

While former Yahoo CEO Scott Thompson fades from the tech scene — besides getting jacked from the top job at the Silicon Valley Internet giant, he’s also just come off two tech boards he had served on — the investigation over his hiring and how a fake computer science degree got into the company’s regulatory filings continues.

While the quick-fire controversy burned Thompson, as well as now former Yahoo director Patti Hart, the special committee of independent board members is still at work trying to figure out how such a mess was made in the first place.

And, more importantly, who knew what when and told whom.

At the time the committee was announced, Yahoo said it would “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.”

The special committee is chaired by Yahoo’s new Chairman Fred Amoroso and includes John Hayes and Thomas McInerney, two independent directors who joined the board in April.

Yahoo also hired independent counsel Terry Bird of the law firm Bird, Marella, Boxer, Wolpert, Nessim, Drooks and Licenberg in Los Angeles to handle the inquiry.

The company also noted at the time that “the special committee and the entire Board appreciate the urgency of the situation and the special committee will therefore conduct the review in an independent, thorough and expeditious manner. The Board intends to make the appropriate disclosures to shareholders promptly upon completion of the review.”

Gripped by urgency myself, I have grown weary waiting by the phone for some official answers, which sources said will not be forthcoming for some time.

But since I am the most curious of cats — uh-oh! — I started dialing around on my own to find out what’s what.

And, according to sources — especially since Thompson has settled with Yahoo and will not get severance due to the academic falsehood — the big focus is now centering on if the company’s staff screwed up the background check of his academic credentials, thus allowing it to get into its official filings with the Securities and Exchange Commission and also on Yahoo’s corporate Web site.

When Thompson was hired from eBay, where he was president of its PayPal payments division, the online commerce company had the correct bio information in its SEC filings, although not on its Web site or in its PR materials.

The question is: Did someone from Yahoo simply rely on Web bios and not check eBay filings and did anyone ever re-check Thompson’s college records? (Note: It took me 15 minutes flat to find out he did not have such a degree at Stonehill College in the Boston area.)

If lazy checking was the case, it spells rank incompetence on the part of staffers, as well as Hart, who headed the search after Yahoo fired its previous CEO Carol Bartz last fall.

A much more troubling line of inquiry taking place is aimed at the possibility that someone at Yahoo did discover the discrepancy in Thompson’s resume and either did not report it up the chain of command or did and it was either lost or ignored or, well, worse.

While this certainly ain’t Watergate, such a situation would be very hard for Yahoo to explain away as easily to shareholders, especially potentially litigious ones. As it is always said, the coverup can often be more damaging than the crime itself.

And, if it is determined by the special committee that certain employees knew of Thompson’s resume inaccuracy, it will most certainly result in dismissals of Yahoo employees.

The focus on the committee — which truly cannot sweep this under the rug, if it occurred in this much more serious scenario — is most obviously the legal department of Yahoo, which is responsible for making certain filings are accurate.

Also under scrutiny is the quickness of the hiring of Thompson.

Among the questions is how much vetting was done and whether adequate questions about him were asked among a variety of possible sources.

When he was picked in January, Thompson was a dark-horse candidate for many, including some Yahoo board members.

In fact, he was not on the initial headhunting lists prepared by outside talent search firm Heidrick & Struggles.

That’s because Heidrick had placed Thompson at eBay in mid-2000 and could not then recommend him to Yahoo. As it turned out, Thompson took it upon himself to cold email Yahoo board member and Intuit CEO Brad Smith about the job, who then passed Thompson’s interest to Hart.

Heidrick had no involvement in the checking of Thompson, although he later blamed the firm in a public meeting with Yahoo employees for putting the error in his bio in the first place from when he was hired at eBay. Heidrick quickly called the accusation “verifiably not true” in a memo to its own employees.

Sources said that meant that the firm had a resume that Thompson had submitted to it that also contained the error.

But the central mystery of how that mistake appeared on his bio will likely remain just that without further explanation from Thompson.

In a radio interview in 2009, he did not correct a specific question about the twin degrees he appeared to have held and seemed to even agree with the show’s host, Moira Gunn, about them.

Later, she told me in a video interview that Thompson had clearly indicated to her in the prep for that interview that he indeed had a computer science degree.

Still, it is still not clear — and may never be — who put the faux computer science credential on his resume in the first place.

So, with all apologies to Winston Churchill: It might remain a riddle wrapped in a mystery inside an enigma.

Yahoo's Parting With Thompson Will Be for "Cause" (aka CSLie)

Kara Swisher — Mon, 14 May 2012 09:00:21 +0000

According to numerous sources, Yahoo is claiming “cause” in its parting with former CEO Scott Thompson, related to the fake computer science degree on his resume.

Such a determination will mean the company is not obligated to pay him the large severance that would have been due to him otherwise.

In his offer letter on January 3, Yahoo spelled out the terms of the employment agreement, noting what would happen if he left the company under more positive “without cause” terms.

“If Mr. Thompson’s employment is terminated by the Company without cause or by Mr. Thompson for good reason, the Company will offer him severance benefits similar to the benefits it provides to other senior executives of the Company at the time of his termination,” reads the document, which was filed with the Securities and Exchange Commission. “In addition, if Mr. Thompson’s employment is terminated by the Company without cause, by Mr. Thompson for good reason, or due to Mr. Thompson’s death or disability, the Make-Whole RSUs that are then outstanding and unvested will fully vest upon his termination.”

The “Make-Whole” RSUs — or restricted stock units, related to his time as president of eBay’s PayPal payments division — were valued at $6.5 million in Yahoo’s SEC filings.

But sources said Yahoo has relied on another clause in Thompson’s offer letter, titled “Code of Ethics and Yahoo! Policies,” to make the case that it would not have to pay out such a large sum to him.

Reads the clause:

“Yahoo! is committed to creating a positive work environment and conducting business ethically. As an employee of Yahoo!, you will be expected to abide by the Company’s policies and procedures including, but not limited to, Yahoo!’s Guide2Working@Y!, Yahoo!’s Code of Ethics and Yahoo!’s Corporate Governance Guidelines,” reads the letter. “Yahoo! requests that you review, sign and bring with you on your Employment Start Date, the enclosed Code of Ethics Acknowledgment Form.”

Under the Silicon Valley Internet giant’s ethical terms, the borked bio and how it got that way — which was still under investigation when Thompson stepped down — was the major issue in his ouster, since he was responsible for making sure it was accurate when submitted for regulatory filings.

In addition, while Thompson publicly blamed a headhunting firm for making the error back in the mid-2000 timeframe, that company — Heidrick & Struggles — hit back, saying his claims were “verifiably not true.” According to sources, Heidrick apparently possesses an inaccurate resume submitted to them by Thompson.

Heidrick, which placed Thompson at eBay many years ago, was not involved in his hiring at Yahoo. It had to recuse itself from his vetting as part of its search for a new Yahoo CEO, because it had placed him previously.

In fact, Thompson had nominated himself for the job via cold emails with Yahoo board members and was examined and hired quickly.

Perhaps too quickly, given the poor background check that was discovered by activist shareholder Daniel Loeb of Third Point.

Sources close to the board said that investor pressure relate to these credibility lapses grew too loud, along with employee rancor at Thompson’s actions — forcing the issue this weekend.

What was definitely not a reason for Thompson’s departure from Yahoo — although it was unfortunate timing — was an unspecified “illness” I referenced in my initial story on the subject.

(Note to readers: I found out this weekend that illness was thyroid cancer. But I declined to name it specifically, since I felt it was Thompson’s right to publicly reveal such a personal health issue and not mine. While I recently suffered a stroke and the experience perhaps influenced this editorial decision, the cancer was only a side issue to the resume drama at Yahoo and not naming it specifically seemed, well, more responsible to me. Argue amongst yourselves about it, but that’s my take. And also, I wish Thompson a successful treatment and speedy recovery)

That said, The Wall Street Journal did an entire piece about the cancer today today, noting that “the decision to step down from Yahoo was in part influenced by Mr. Thompson’s cancer diagnosis.”

That might have been true for Thompson — a source close to him characterized the parting as “mutually agreed” — and perhaps his illness accelerated the resume controversy.

But all that aside, he was given no choice in the matter by the Yahoo board, numerous sources said. The parting was almost entirely due to the mess about the botched bio and all its implications.

In fact, in all its public communications about his leaving, Yahoo and its execs offered no token thanks and barely even mentioned Thompson, such as in its official statement yesterday.

It read, referring to newly chosen interim CEO Ross Levinsohn: “Mr. Levinsohn replaces Scott Thompson, former Chief Executive Officer, who has left the Company.”

And left it he has, without a choice and with what will be a much smaller settlement, sources said. It is not clear when Yahoo has to unveil those terms in public documents.

Is He In or Is He Out? Crunchtime for Scott Thompson at Yahoo.

Kara Swisher — Fri, 11 May 2012 15:15:28 +0000

While he has only been CEO of Yahoo for less than five months, in the next several days Yahoo CEO Scott Thompson is facing perhaps the most critical moment of his short tenure.

According to sources with knowledge of the situation, the board of Yahoo is not likely to take long in assessing whether he will stay or if he will be let go, due to a controversy around how a non-existent computer science degree got on his bio and also in Yahoo regulatory filings.

A special committee of independent directors is now investigating the matter, including trying to assess the damage has had on Thompson’s ability to lead the Silicon Valley Internet giant.

How quickly the board moves is likely to be a sign of their intent. If within the next days, it is likely to let the former president of eBay’s PayPal payments unit go and replace him with a current company exec; if it waits longer and shows some public support of him — which the board has not done since the scandal erupted — Thompson’s chances are better that he will only be given some sort of censure.

One important task is also closely considering the impact of possible legal problems related to Thompson and others signing documents with the Securities and Exchange Commission that were not accurate.

One thing is clear from interviews with multiple sources, many members of the board have not been happy with how Thompson has handled the matter since activist shareholder Daniel Loeb of Third Point uncovered the problem a week ago.

While first tossing the borked bio as an “inadvertent error,” Thompson was then largely silent about the issue with staff, despite being in close meetings with them, which caused stress among key execs.

Then, he made a public announcement in which he apologized for only the “distraction” caused by the incident and not the error itself as some had hoped he would.

Yesterday, apparently feeling it was time to try to explain things face-to-face, Thompson made another attempt to explain what happened in two separate meetings with his direct reports and then his senior staff, apparently trying to get through to employees that he did not fake his resume nor did he give an inaccurate bio to Yahoo when he was being hired for the job earlier this year.

Thompson thought it was time — now that the board investigation was underway — to answer questions directly, said a source.

Among other things, Thompson gave a somewhat convoluted explanation that it appeared in his bio due to a misunderstanding during an interview with a headhunting firm. And that he never noticed it once it proliferated And that when an NPR interviewer asked him directly about his CS degree, he did not want to correct her in mid-discussion — although others report he said he did not hear the question fully.

Sources said Thompson — who is on the midst of initiating changes across a large and troubled organization, after laying off 2,000 employees — thought the sessions went well, that he clearly communicated that he was taking blame for the problem and its repercussions. Those sources also noted that he received support for doing so after the talks.

But, more than a dozen others I interviewed who were listening remotely — some of whom I sought out and some who contacted me directly — thought Thompson’s complex explanation was deeply problematic and that he tried to foist the blame on others rather than on himself.

Every one of these people expressed the need for him to step down to allow Yahoo to move forward.

What the board thought about the performance is still not clear, said sources, but things are coming down to two distinct scenarios.

The first is a quick parting of the ways with Thompson, within days, either for cause or via a negotiated settlement. Others at Yahoo involved with perpetuating the mistake in the bio are also at risk.

This option is perhaps the more likely at this moment, unless the scandal dissipates and employees continued rancor over the situation can be assuaged soon.

In this case, sources said, Thompson will be replaced by a current board member or a member of the top staff. When directors fired Carol Bartz last fall, CFO Tim Morse became interim CEO and he is one of the likely candidates for the job again.

The second scenario centers on needing Thompson to complete a number of complex transactions related to the sale of Yahoo’s Chinese assets and its re-negotiations with Microsoft over its troubled search partnership, among other things.

In that case, Thompson will be censured in some manner by the board and will also probably have to endure some punishment for allowing false regulatory documents to be filed by Yahoo. Others at Yahoo will also be subject to the same treatment in such an outcome.

How will it turn out?

Only board member Patti Hart has so far paid for her faulty vetting of Thompson, stepping down from the board earlier this week.

But whether she will be the only shoe to drop in what has turned out to be a bizarre wildfire that as raged across Yahoo’s troubled landscape remains to be seen.

Thus, most definitely watch this space this weekend.

Not So Scott Free? Yahoo's Other Big Shareholder -- Cap Re -- Leaning Toward Supporting Loeb Over Thompson ResuMess.

Kara Swisher — Thu, 10 May 2012 22:56:57 +0000

One of Yahoo’s biggest long-term investors, Capital Research and Management, which owns more than 10 percent of the company in two different funds, is leaning toward voting for the slate proposed by activist shareholder Daniel Loeb of Third Point, in the wake of the controversy around the botched bio of its new CEO Scott Thompson.

“Having a CEO with that hanging over his head is really a problem going forward,” said one person with knowledge of the situation. “It’s hard to pretend this is not a problem.”

While sources said Yahoo’s longtime institutional investor — which currently holds large stakes via its Capital Research Global Investors and Capital World Investors funds — is not likely to go public with their voting choice until close to the annual meeting, which will take place sometime this summer.

But its fund managers have told key Yahoo board members of their grave concerns over the situation.

Ironically, in the last proxy fight showdown with Carl Icahn, Capital removed its support of Yahoo’s slate too and was an important influence to many major changes at the company.

Such a move is problematic for Thompson, since the rejection of another big shareholder at its upcoming annual meeting will keep the unusual issue and right in the middle of a noisy proxy fight.

A special committee of the Yahoo board is investigating the situation — in which a fake computer science degree somehow got on the resume of the former president of eBay’s PayPal payments unit and later into official Yahoo regulatory filings.

The problem was uncovered last week — unfortunately for the Silicon Valley Internet giant — by Loeb, who has been banging away on Yahoo since.

A trio of independent Yahoo directors is looking into the mess, with a focus on how that happened, whether anyone at Yahoo knew of the inaccurate bio and how it got there in the first place.

Also of great concern, is how Thompson could have not seen the error in the many years it was on the Web site of eBay and also how he approved a bio that had the inaccuracy in it when he was hired by Yahoo in January.

Worse still, in a 2009 interview, he clearly did not say he did not have such a degree in with a radio show host when directly asked about it.

“It’s a little hard believe an executive of this level would have missed such a thing, when he had so many opportunities to fix it,” said one source. “And, if he did overlook it that many times, that’s a problem too.”

In fact, according to a report earlier today by Business Insider that I also confirmed, Thompson told employees today in two separate meetings that he did miss the error since it was placed there — inexplicably — in 2004. In the meeting, he blamed a low-level headhunting staffer who added it incorrectly, an error that then proliferated.

Thompson also said he did not provide a resume to the company in his hiring process — say whaaaat, but true — although this still does not absolve him from the original error.

As to the interview: Thompson said he did not want to be rude and correct the host of TechNation, Moira Gunn, after she clearly asserted to him he had a computer science degree as part of a question on his qualifications. Others present at the meetings said he said he did not hear the question.

But, in an video interview with me yesterday, though, Gunn said she and Thompson discussed a computer science education in a way that left the clear impression that he had obtained one.

While Thompson’s excuse may beggar the imagination of some, it’s his story and he’s sticking to it. In all seriousness, his complete lack of willingness to take responsibility for the error — even if it was not his fault — itself is a little startling.

Because what’s not clear is how the bio was miraculously correct in eBay’s official filings and also if it is plausible that he never saw the mistake.

Numerous communications execs at Internet companies told me that it was unusual for a high-level exec not to pay close attention to information that went out about them, especially in legal filings. In addition, just as many execs are made to check and swear on their bios that go into such documents.

In fact, it was Thompson’s job to make sure the things written about him were correct at all times. As CEO, as a major Silicon Valley player pointed out, he is required by federal law to personally certify Yahoo’s Securities and Exchange Commission filings. Violations of these rules carry financial and also potential criminal penalties.

Sources said the board is worried about that credibility issue too and it puts Thompson in an ever-dicier position. Noticeably, the board has yet to make a public statement of support for him on the issue.

Also a major worry for the directors is the mostly negative response to the situation from Yahoo employees, who are deeply upset that Thompson’s error was not caught and that he might not be treated in the same way as anyone else who turned in a false resume, whether it was by accident or not.

A Yahoo spokeswoman told me last week that there was also support internally for Thompson, but in many dozens of interviews I have done with Yahoo employees and a continued monitoring of internal bulletin board, the tone is not in his favor by any means.

Like I said, it’s a dicey time to be Scott Thompson right now.

Loeb Calls Again for Thompson Firing From Yahoo, as Former eBay Boss Supports Him

Kara Swisher — Wed, 09 May 2012 14:33:40 +0000

As expected, activist shareholder Daniel Loeb of Third Point released a new letter on the bio controversy he set off at Yahoo, again calling for the firing of its CEO, Scott Thompson.

“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,” read the letter in part. “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, who is waging a proxy fight with Yahoo over board seats he wants, also offered to work with the Yahoo board to find a new CEO if it accepted his slate of directors. In the interim, he suggested Yahoo put either CFO Tim Morse or media head Ross Levinsohn in the job. Morse had taken that position temporarily after Yahoo fired its last CEO Carol Bartz last fall.

Confused yet?

Loeb set off a management crisis there last week with the revelation that Thompson had added a fake computer science degree to his bio.

The first casualty came yesterday with the stepping down of Yahoo director Patti Hart, who was charged with vetting Thompson for the job.

The Yahoo board also announced yesterday that it would be conducting a probe of the circumstances around the hiring, as well as how the faux academic credentials got in Thompson’s bio and also the company’s regulatory filings.

The new letter was a reaction to Thompson’s apology on Monday for the borked bio becoming a “distraction” (but not, oddly, for the mistake itself). Loeb had previously called for Thompson’s firing over the bio fibbing.

Loeb will be appearing at an investor conference in Las Vegas later today, where he will surely be asked about the situation.

In related news, eBay CEO John Donahoe, Thompson’s former boss, lent words of support, but also underscored that the online commerce company’s legal filings of his bio were always correct, even if its Web site and other PR documents handed out were not. Thompson came to Yahoo from a stint as president of eBay’s PayPal payments unit.

As reported by Bloomberg, Donahoe said:

“When Scott was hired at EBay Inc., all of EBay’s filings had the accurate information. Some of EBay’s PR materials had that bio. Our legal filings were taken care of by our legal department. Some of the PR materials had that info,” he said while in Tokyo of the correct bio versus the incorrect one.

Donahoe added: “I think Scott Thompson did a great job at PayPal. I think he’s a very talented leader and I believe he can help Yahoo. I hope they get through this and he can continue to do the very challenging job he’s got of helping to turn Yahoo around. I’m Scott’s biggest fan.”

This has been the first public support of Thompson by a prominent Internet figure, which might help lagging morale at the company.

Here’s the full version of the latest Loeb letter:

Third Point May 9 Letter Release

Exclusive: Yahoo Director in Charge of Botched CEO Vetting to Step Down From Board

Kara Swisher — Tue, 08 May 2012 15:50:13 +0000

CSLie has claimed its first victim, although the mystery is still unsolved.

Patti Hart — the Yahoo director in charge of the search that resulted in the hiring of Scott Thompson as its CEO, making her directly responsible for a clearly botched vetting of his academic record — will not stand for re-election to the board at the next annual meeting, according to sources close to the situation.

Hart — who is CEO of International Game Technology, which makes electronic gaming equipment and systems products — is resigning. Apparently, said sources, her own board asked her to remove herself from the Yahoo mess to better focus on the company she actually runs.

But she is perhaps just a few steps ahead of being pushed, given her key role in the hiring of Thompson, who was president of eBay’s PayPal payments unit when he cold-emailed Yahoo director and Intuit CEO Brad Smith seeking the job.

A Yahoo spokesman declined to comment.

[UPDATE: Yahoo confirmed the inevitable departure later in the day and said the Yahoo board would have nine members going forward. Hart also released a statement, confirming the move.]
Hart, who came to the Yahoo board in 2010, has been head of its corporate governance and nominating committee.

The departure makes her the first casualty — but definitely not the last — of the controversy over how a fake college degree managed to get in Yahoo’s regulatory filings via Thompson’s inaccurate bio.

The issues around how Thompson was hired — including how background checks on him failed to discover that he never got a CS degree from the Boston area’s Stonehill College, as his longtime bio on eBay had claimed — are part of a new investigation by the board.

That will be officially announced later today, along with the hiring of an outside law firm to conduct the probe, which will be headed by independent director Fred Amoroso.

[UPDATE: Yahoo officially said it was forming a special committee to look at Thompson's bio snafu and the circumstances around his hiring. Along with Amoroso, the other members are John Hayes and Thomas McInerney, independent directors who joined the board in April.

"The special committee and the entire Board appreciate the urgency of the situation and the special committee will therefore conduct the review in an independent, thorough and expeditious manner," a statement from Yahoo said.

Interestingly, the statement did not include a show of support for Thompson, which often happens in such circumstances.]

They will have a lot to investigate. Such as this mystery: Thompson’s correct bio appeared in filings eBay made with the Securities and Exchange Commission, while Yahoo’s similar documents were inaccurate about his educational credentials.

Also under scrutiny: How the falsehood was added to Thompson’s public resume, and who put it there; why Thompson never noticed the error, there since at least 2004; why he declined to correct it when asked directly about it; and who at Yahoo might have known about the problem before the hiring.

It’s a basic case of who, what, where, when and how. And, most of all, why anyone would make such a dumb mistake.

Hart would seem to have all the answers to that, along with a forensic firm that worked on the vetting. Key Yahoo staffers were also involved, said sources, although its headhunting firm on the CEO search, Heidrick & Struggles, was not used in relation to Thompson.

Presumably, there is a paper trail of some sort, which was the subject of a legal demand by activist shareholder Daniel Loeb of Third Point yesterday. He uncovered the bio error last week, in the middle of pressing a proxy fight to garner board seats.

Loeb’s allegations also nailed Hart in much-less-egregious padding of her own college record, making it appear as if she had economics and marketing degrees. She has one in business administration, with “specialties” (Yahoo’s ridonkulous word, not mine) in economics and marketing.

While Hart’s leaving might assuage some, providing a convenient scapegoat to the bizarre situation, this is by no means over for Yahoo or Thompson.

Another increasingly potent issue is the ever-declining morale at the Silicon Valley Internet giant over the company’s odd response — it initially called the bio problem an “inadvertent error,” without further explanation — and also Thompson’s lack of transparency on the issue.

He released an email to employees last night, apologizing for the “distraction” of the resume issue, but not for the error itself.

That, and other of Thompson’s actions — he has been described to me, by many close to the situation, as defiant over the issue, and as blaming Loeb for conducting a personal vendetta — did not sit well with many, both inside and outside Yahoo.

A Yahoo spokeswoman told me earlier this week that there is much support for Thompson internally and externally, but declined to provide specifics.

But message boards I read were mostly negative about him, as are a plethora of direct emails to me on the situation. One clever commenter on this site bemoaned that Thompson might get off “Scott-free.”

Ouch! Nonetheless, the atmosphere at Yahoo is indeed unsettled.

“Sentiment from employees is unanimous that he must go,” said a Yahoo employee, who has no personal agenda that I can grok, in a common refrain. “He clearly knew and lied for years; and his handling since exposed has been unacceptable.”

Unacceptable or not, though, Hart is the only one going for now. But stay tuned.

Until then, here’s an appearance I made today on WSJ.com to talk about Hart’s departure:

[ See post to watch video ]

CEO Says Sorry to Yahoos for Borked Bio "Distraction" -- But Will Mea Culpa Work Without an Apology for Error? (Memo)

Kara Swisher — Mon, 07 May 2012 23:59:45 +0000

He’s sorry. Deeply regrets. Apologizes. Takes full responsibility for the unfortunate distraction to the people.

No, it’s not a scandal-ridden politician caught in some compromising position, but Yahoo CEO Scott Thompson talking about the hubbub created by the addition of a fake computer science degree on his bio.

This kind of move is, of course, PR 101, but it still took Yahoo several days after activist shareholder Daniel Loeb uncovered the resume problem, which the Silicon Valley Internet giant said was an “inadvertent error.”

In his new memo, which comes after a terse one on Friday, Thompson said he was upset by how the controversy has impacted the company.

“As I told you on Friday, the board is reviewing the issue and I will provide whatever they need from me. In the meantime, I want you to know how deeply I regret how this issue has affected the company and all of you,” he wrote. “We have all been working very hard to move the company forward, and this has had the opposite effect. For that, I take full responsibility, and I want to apologize to you.”

It is interesting to note that he said nothing in the new email about being actually sorry for the still-mysterious inaccuracy in his bio.

It was present since 2004 when he worked at eBay and also somehow got into the Yahoo regulatory filings after he was hired earlier this year.

Presumably, that information is to come after an investigation by Yahoo’s board, headed by independent director Fred Amoroso, which is proceeding now.

It will be announced officially tomorrow, but it is already in the works, as Thompson noted.

Earlier today, Loeb demanded all books and records about the circumstances of Thompson’s hiring and has made hay out of the issue.

To calm the story, said Thompson to his new troops: “I am hopeful that this matter will be concluded promptly.”

Unfortunately for him, that hope is probably also going to turn out to be inaccurate.

But read it for yourself. Here’s the internal memo that just went out to all Yahoo employees from beleaguered Thompson, which I obtained from the company.

Loeb Lobs Lawsuit, as Expected, at Yahoo's Borked Bio Mess

Kara Swisher — Mon, 07 May 2012 16:23:59 +0000

Botched CEO bio. Activist shareholder. Screwy board of directors. Mix it all together and what do you get?

More legal filings, natch!

This — as I reported this weekend would happen today — from Dan Loeb of Third Point, which is waging a proxy fight against Yahoo.

The aggressive hedge-fund investor — who owns close to 6 percent of Yahoo — recently scored a direct hit by revealing that new CEO Scott Thompson had added a faux degree in computer science to his bio, which somehow made its way into regulatory filings of the Silicon Valley Internet giant.

This, despite a supposed thorough vetting by Yahoo’s board of the former president of eBay’s PayPal payments unit.

Not so much, as it turns out — which is why Loeb is asking for all the information about Thompson’s hiring process and more.

Third Point said it was making a demand “under Section 220(b) of the Delaware General Corporation Law to inspect books and records relating to the hiring of CEO Scott Thompson, the appointment of Patti Hart to the Yahoo! Board, and the selection of Board Members Peter Liguori, John Hayes, Thomas McInerney, Maynard Webb, Jr., and Fred Amoroso.”

And its press release added:

“Third Point believes that Yahoo! shareholders and employees will be best served if the Board accepts responsibility quickly for this latest debacle … We believe that this internal investigation by this Board must not be conducted behind a veil of secrecy and shareholders deserve total transparency.”

Well, it looks like it will eventually be all out in the open, what with all the legal motions flying.

Expect a Yahoo response soon, which sources said will focus on a board investigation — using an outside law firm, and headed by independent director Amoroso.

Here you go on Loeb’s shot today:

Third Point May 7 Demand Letter Release

As Yahoo CEO Reaches Out to Top Staff, Board Meets to Weigh "Options" (I.E., Deciding Who Gets to Take the Borked Bio Blame)

Kara Swisher — Mon, 07 May 2012 03:27:43 +0000

Even as Yahoo’s board was kibitzing all weekend about how to handle the continuing resume-padding controversy around its recently hired CEO Scott Thompson — including hiring its own outside crisis communications firm to represent it — he was working the phones to keep top staff apprised of the evolving situation.

While Thompson told those he spoke to that he was limited in what he could say and blamed a “personal vendetta” by an activist shareholder for his troubles, being proactive in this regard is probably a good idea.

That’s because multiple sources said he said exactly nothing in various strategy meetings with top employees last week about allegations leveled by Dan Loeb of Third Point, which proved correct, that Thompson had not gotten a computer science degree in college, as his longtime bio had claimed.

“It was the gorilla in the room and it was awkward in the extreme,” said one exec present at the meetings. “He never brought it up, which was even worse.”

At this point, it seems unlikely that Thompson can regain the confidence of many at Yahoo — even though a company spokeswoman said he received a lot of incoming support too, both externally and internally — until he can render some cogent explanation about how the borked bio got into both Yahoo’s public site and also its more critical regulatory filings.

Even more mysteriously, how the error was never present in filings with the Securities and Exchange Commission made by eBay, where Thompson led its PayPal payments unit, although his public eBay bio has also been wrong for close to a decade.

And, most of all, how was it that Thompson never caught the mistake himself — even when directly asked about it — despite the likelihood of reviewing it multiple times over those many years and ultimately certifying it for Yahoo’s own SEC filings.

Calling Encyclopedia Brown to solve the Case of the Computer Science Degree That Wasn’t!

Thompson has given no explanation about the debacle to the bulk of the Yahoo staff at all levels, save for an information-free and terse note to employees on Friday afternoon that essentially asked them to focus on their work instead of his bizarre crisis.

Unfortunately for him, many Yahoos are focusing a lot on Thompson, with message boards at the Silicon Valley Internet chastising their CEO and giving him support that is tepid at best. From interviews I have had with two dozen employees this weekend, to say morale is at an all-time low is perhaps understating the situation.

Here is a short selection of comments that were read to me, for example:

What appears to trouble employees the most in the threads I was read was the nonchalance of the initial Yahoo statement about the issue, which called the addition of a fake degree on Thompson’s bio an “inadvertent error.”

“From a pure employee perspective, it feels like it is a violation of their principles,” said one person, reflecting a dozen or more conversations I had this weekend up and down the organization. “And anyone else would probably be immediately fired for this, even with an explanation.”

Said another: “He clearly knew and lied for years; and his handling since exposed has been unacceptable.”

As I noted above, a company spokeswoman said there was also much support for Thompson (pictured here) within the company, but declined to provide any quotes or details.

Presumably, some answers will be coming from a board investigation aimed at getting to the bottom of the situation, including trying to grok who put the error in the bio in the first place.

My bet: They’ll try to pin it on a lower-level minion, although that will not fly with a lot of people.

Including me, because whoever typed in the faux degree, its presence there has been too long for Thompson not to be responsible for it.

Flunky error or not, there are important questions about whether Thompson himself provided a bio that contained the inaccuracy to the board when he put himself forth for the job via direct emails to Yahoo director and Intuit CEO Brad Smith.

That line of thought basically boils down to: Can Thompson not read?

More problematic is the fact that the placement did not come via Yahoo’s headhunter on the CEO search, Heidrick & Struggles, which apparently was not charged with doing a background check on Thompson.

Instead, the director in charge of the search, Patti Hart, sources said, hired another forensic firm, which appears to have missed Thompson’s erroneous academic record.

The only thing completely clear amidst all the confusion: Hart screwed up by botching an extremely simple part of a vetting she was charged with. That makes her vulnerable, of course, along with other Yahoo board members or staffers closely involved in the talent search.

While Hart (pictured here) is in a much dicier position, Thompson still appears to have initial board backing — at least for today — as it’d be a very tough call to fire yet another CEO so quickly in the middle of several key deals for Yahoo, as well as a proxy fight.

Said one person close to the situation, the board is still considering its “options,” in an effort that is being led by independent board member Fred Amoroso.

So, it will be instructive to see how the board will proceed tomorrow — especially since it is likely that Loeb will lob a lawsuit to try to get more information on the Thompson hiring process.

But it’s started by hiring its own outside communications firm, Sard Verbinnen, which has handled other crises for Yahoo in the past.

Sard’s Charles Sipkins — welcome back, Charlie! — had no comment about the board’s next move, except to reiterate its statement from last week that it is looking into the Thompson bio mess and will make appropriate disclosures at some point.

We can’t hardly wait.

They Shoot Yahoo CEOs, Don't They? But Not Without a Really Smoking Gun and a Much Stronger Board.

Kara Swisher — Sat, 05 May 2012 16:33:02 +0000

Earlier today, Yahoo’s persistent thorn, activist shareholder Dan Loeb of Third Point poison-penned another letter to the board of the Silicon Valley Internet company, demanding that Yahoo fire its new CEO Scott Thompson, as well as director Patti Hart, over bizarre inaccuracies related to their academic achievements.

“Permitting Mr. Thompson and Ms. Hart to stay with the Company after apparently violating the Code of Ethics sends a message to all Yahoo! employees that a different set of rules applies at the top,” Loeb wrote.”[Yahoo must] terminate Mr. Thompson for cause immediately given his demonstrable unsuitability to remain Chief Executive Officer and a director of Yahoo! and accept the resignation of Ms. Hart for similar reasons.”

And while many across the blogosphere — including some very clever tweets — called for his head tout de suite, that’s just not going to happen.

At least for now, at this early point in a controversy over Yahoo filing legal documents that misrepresented Thompson’s long-ago degree from Stonehill College.

In a nutshell: Thompson does not have a computer science degree, as he had maintained he did in public bios for almost a decade, a falsehood that mysteriously seeped into documents Yahoo filed with the Securities and Exchange Commission.

That’s bad news for Yahoo, for sure, on many levels, but moving against Thompson at this moment is not likely to be the answer — for the short term, at least.

That’s due to many reasons, that I like to think of it as three hopelessly complex puzzles that need solving pronto.

The What-Did-Yahoo-Know-and-When-Did-It-Know-It Question

There is no question the first thing Yahoo’s board needs to do is a thorough investigation to determine how a borked bio could proliferate so widely and for so long.

Most importantly, Yahoo will have to reveal if Thompson actually gave them this incorrect information, as he aggressively lobbied for the then-open CEO job.

As I had previously reported several times, Thompson cold-emailed a Yahoo director — Intuit CEO Brad Smith, as it turns out — despite not being on the list of potential candidates. Thompson was then shuttled over to Hart, who was running the vetting process with the help of headhunting firm Heidrick & Struggles, and hired within weeks.

Oddly, sources said Thompson never filled out the required informational papers for the job, nor did Heidrick conduct the normal background check on him. Instead, another forensic firm Yahoo hired did the work.

If it turns out Thompson gave any of them the bad bio info, it would be quick curtains for him.

But if Yahoo’s board members obtained his info on their own, the next key query would be how no one at Yahoo — especially its legal and compliance staffers, as well as outside help — managed to catch the problem during the vetting of Thompson.

Here are some good questions to start with:

Who put a faux computer science degree on Thompson’s bio in the first place, why and when did it happen?

Where did Yahoo get the inaccurate information?

Who was in charge of checking Thompson’s academic record for Yahoo?

And, who checked the work of the checkers?

The problem is made more complicated, because correct information was easily available in the SEC filings of eBay for years, since Thompson was head of its PayPal payments unit.

While the resume information was indeed wrong on eBay’s Web site and on numerous bios of Thompson for years, how did eBay legally get it right while Yahoo did not?

That calls into question the expertise of the company, its directors and those they hired to make sure execs were completely on the up and up, a task they clearly failed at.

If rank incompetence is the reason, which it looks like it might be, expect certain board members and other Yahoo staffers to go, along with anyone who helped in the Thompson vetting, or lack thereof.

Unless, of course, the gang-that-couldn’t-shoot-straight actually did shoot straight and some one at Yahoo found out about the educational discrepancy before the new CEO was announced, but declined to fix it.

While sinister, such a scenario is not entirely implausible, given how much pressure Yahoo was under at the time to hire a CEO quickly, due to Loeb and his looming proxy fight.

If any evidence were to surface that this was so, it is curtains all around, which would rain the kind of disaster down on Yahoo’s Sunnyvale HQ that would make Loeb’s attacks look like a Nerf battle. Instead, it would be “The Hunger Games” — except that no one survives.

The Chaos-in-Sunnyvale Conundrum

Which brings us to the profound implications of Yahoo jacking its second CEO within six months.

While it’s easy to yell “Fire the CEO” on a crowded Twitter, it’s simply not so easy in practice.

How long did it take Yahoo’s lugubrious board to figure out Carol Bartz needed to go? A … long … time. (And, she had a CS degree!)

More to the point, Thompson — and his not-so-merry band of consultants from Boston Consulting Group and, this week, McKinsey & Company — has only just completed a massive layoff of 2,000 employees and a jarring restructuring of management.

He’s also in the early stages of rolling out a new and decidedly still-squishy strategic plan to top execs (also just this week), along with working on some other key initiatives.

That includes renegotiating its search partnership with Microsoft; noodling around on a possible deal with Google; contemplating the sale of a variety of assets; and — oh, yes — trying to take on social networking Godzilla Facebook over patent infringement.

Busy much?

But, most importantly, Thompson is now the umpteenth Yahoo CEO to be working on the never-ending talks with its Asian partners over selling back a piece of the company’s lucrative stake to them.

While Yahoo CFO Tim Morse and head lawyer Mike Callahan are the point men on the deal, the lack of CEO would be an issue in the now-proceeding again talks.

This is a sale that must — and I underscore must — get done and soon, giving Yahoo much-needed breathing room and a whole lot of cash to fork over to increasingly disgruntled shareholders.

So, expect Yahoo to try to milk that deal for all it’s worth in the coming week, in order to give the appearance, at least, of positive forward momentum.

And, like it or not, Thompson has to play a key role in it getting done.

Thus, the likelihood of wait-and-see over point-and-shoot on Thompson is higher than you might think.

That’s especially true given four members of the board are leaving within six weeks and have either or are in the process of being replaced by new members.

Then, Thompson will be their problem to solve.

Again, no small thing, since the old crew — led by feckless Chairman Roy Bostock — is not likely to want to end its appalling tenure with yet another disaster.

Such a move would further tarnish the legacy of its outgoing directors, although I am not sure how it could be any more sullied, given their consistent record of one bad decision after the next.

What do I really think? I think this cursed board will maintain its 100 percent score of doing the wrong thing at the right time.

It could be a different case with the new directors, of course, who all seem pretty sharp and not as easily impressed by a record of failure.

They will surely be monitoring Thompson carefully, as will employees, who have taken to internal message boards with a rage not seen in a while over the resume debacle.

Their morale might be one uncertainty impacting Thompson’s fate. If a lot of key employees continue to bolt Yahoo or those remaining more loudly express their disdain for the bio antics, the new directors might listen.

The Whatever-Loeb-Says-We-Won’t-Do-Till-Later Head-Scratcher

Which brings us back to Loeb, whose noisy campaign to grab seats on the Yahoo board has certainly hit home this week.

And, though Yahoo likes to ding him a lot, since he started his campaign of terribly entertaining investor terror, a lot of what he’s been calling for has happened.

That includes a major flushing of the board — with five longtime members, including co-founder Jerry Yang, going, going and gone.

In addition, Loeb brought pressure to slow down some questionable deals, from Yahoo’s PIPE dream to a tax-free spinoff in Asia in a deal only an accountant could love.

He’s also — though they try to deny it — got the Yahoo directors in the dangerous habit of reacting to him, rather than playing their own game.

While the Yahoo board has resisted any deal with Loeb (pictured here), blaming him for rejecting their kind offers of settlement, it is he who is setting the tone more than Yahoo.

And that tone is of alarm and trouble and chaos at Yahoo.

That’s not going to work to convince other Yahoo investors to back his cause — in fact, Loeb has a decidedly uphill battle to win his proxy challenge — he has still scored a direct win with the bio relevations.

So far, though, Loeb has not sunk Yahoo’s battleship, so it is unlikely the board will acquiesce to his latest demand of Thompson being fired by noon on Monday.

Maybe it will eventually, or maybe it will just scold Thompson or maybe it will do nothing at all.

All that is an unknown — a riddle, wrapped in a mystery, inside an enigma, with a lot of managerial incompetence thrown in. And that, most of all, is the sad definition of today’s Yahoo.

Yahoo's Thompson Asks Employees to "Stay Focused" -- Except Not on Him

Kara Swisher — Sat, 05 May 2012 01:04:30 +0000

Of course, the Yahoo internal memo for the Yahoo internal crisis of the week!

Here is CEO Scott Thompson’s email today to employees about the controversy around the fact that he does not have a computer science degree, as described in his bio in Yahoo’s regulatory filings.

Oh, just read it:

In 2009 Interview, Yahoo CEO Does Not Deny He Has a CS Degree, and Calls Himself an "Engineer" (Audio)

Kara Swisher — Fri, 04 May 2012 06:22:41 +0000

On March 25, 2009, Yahoo CEO Scott Thompson — when he was then president of PayPal — appeared on the TechNation radio show to talk about the revival of the eBay payments unit.

At the end of the largely charming interview, Moira Gunn asked him a direct question about his college degrees, specifically noting they were in accounting and computer science.

“Your bachelor’s degree is in accounting and computer science. Now, from both of those, I mean that’s, that’s pretty obvious that’s PayPal,” said Gunn. “What are the most important things you learned?”

“Yeah,” begins Thompson, failing to correct her at all on the fact that he does not actually have a computer science degree — only one in accounting.

He then went even further, touting his early tech training at Stonehill College, near Boston, which did not offer a computer science degree at the time he went there, from 1975 to 1979.

“And that’s really the background that I have, and it started back in my college days, and I think that’s really the wonderful part of being an engineer is you think that way,” said Thompson.

In the most generous interpretation, it’s not quite clear whether Thompson was saying “Yeah” to her statement of his academic credentials, or if he was not actually listening.

But it’s a careless oversight on his part not to have corrected her about the degrees, which could also be said about a computer science degree being present on his bio for more than a half-dozen years at eBay and later at Yahoo without some notice by him.

Because while Thompson has had a long career as a tech exec, as well as a stint as a CIO, academically speaking, a computer science degree did not happen in his college days nor did he graduate as an engineer.

That became apparent earlier today, when Yahoo confirmed that it included inaccurate information about Thompson’s academic background on its Web site and in its regulatory filings.

The admission came after activist shareholder Dan Loeb of Third Point correctly asserted that Thompson’s resume was overstated related to his education.

Yahoo called the inclusion of the computer science degree on his bio an “inadvertent error,” but gave no other explanation as yet. Tonight, the Yahoo board said it was reviewing the matter and would then make appropriate disclosures afterward.

While it is entirely possible that Thompson did not correctly grok what Gunn was saying, it seems pretty clear that he implied his college background was in tech and he was an engineer.

It is true that Thompson did take some computer science classes at Stonehill. And it is entirely possible that he thinks of himself as an engineer by work training and not by college degree.

I am awaiting comment from Yahoo PR, which has its hands full today (welcome to the circus, Amanda!).

Until then, here is the actual audio of that part of the interview and the pertinent part of the transcript, which began at the 26:33 time on the audio, to judge for yourself:

Yahoo's Board Will "Review" Resume Discrepancy of CEO

Kara Swisher — Fri, 04 May 2012 02:28:55 +0000

Yahoo just released a statement that its board will “review” today’s revelation that the bio of its CEO Scott Thompson contained an error related to his educational achievements and will make “appropriate disclosure” about what happened.

On both the Web site and in the regulatory filings of the Silicon Valley Internet giant, Thompson is described as having a degree in both computer science and accounting from Stonehill College.

He does not have a degree in computer science from the Boston-based school, but does have a Bachelor’s of Science in Business Administration (Accounting).

Yahoo said in full in its statement:

“In connection with the statement the company made earlier today about Scott Thompson, the Yahoo! board will be reviewing this matter, and upon completion of its review, will make an appropriate disclosure to shareholders.”

Earlier today, Yahoo first blamed the issue on an “inadvertent error” — but provided no further details — which sources said did not sit well with the board.

“Many members of the board are deeply concerned,” said one person with knowledge of its thinking. “This is a problem on a lot of levels, especially related to the trust of shareholders.”

Indeed, especially since the news came to light via activist shareholder Dan Loeb of Third Point, who is agitating for board seats via a proxy fight.

Loeb’s efforts to impugn Thompson appear to have caused some level of damage, at least in terms of perception about the level of vetting that was done when the former president of eBay’s PayPal unit was hired earlier this year.

In fact, the error has been around for a half-dozen years, which begs the question of why Thompson never noticed it.

While his bio on filings made by eBay to the Securities and Exchange Commission were accurate, the one on the online commerce site’s Web site incorrectly said he had a computer science degree.

It is not known who introduced the error there.

But the inaccuracy moved inexplicably to both Yahoo’s corporate Web site and also its SEC filings, and the company declined to provide any details earlier today as to how that happened.

It’s not clear what happens next, or if there are any legal implications, beyond a needed correction by Yahoo with the SEC — which already took the entire line about Thompson’s education off his Web bio today.

As I wrote earlier today:

The controversy could not have come at a worse time — Thompson was actually in meetings all day yesterday and today with senior staff, following recent layoffs of 2,000 and a massive restructuring, to discuss plans for moving the long-troubled company forward.

And besides the proxy fight, he is also dealing with selling off Yahoo’s Asian assets, renegotiating a new search deal with Microsoft, and also trying to figure out what parts of Yahoo to keep and what parts to jettison to improve its prospects.

How Did a Phantom CS Degree Get on CEO's Bio in SEC Filings? Yahoo's Not Saying.

Kara Swisher — Thu, 03 May 2012 23:08:24 +0000

Back in early 2008 when Scott Thompson got the job as president of eBay’s PayPal, the regulatory filing accurately listed his educational pedigree:

“Mr. Thompson holds a B.S. degree in Accounting from Stonehill College.”

The eBay filings over the next several years — until he left the online commerce giant for a much bigger job as CEO of Yahoo in January of this year — remained consistent.

But, curiously, Thompson’s bio on eBay’s Web site added an additional degree to his curriculum vitae for more than a half-dozen years, different from its Securities and Exchange Commission documents:

“Scott received a bachelor’s in accounting and computer science from Stonehill College.”

As it turned out, according to the Boston-area school, he had not gotten a computer science degree at all and graduated with the Bachelor’s of Science in Business Administration (Accounting).

An eBay spokesman I called today had no explanation for the discrepancy, except to note that its legal filings were correct and that it was an error due to the lack of cross-checking the Web bio, which was apparently posted by Thompson’s staff at the time.

Also without explanation — and perhaps more seriously — is that the false computer science degree claim somehow then made it into Yahoo’s SEC filings, as well as his Web site bio, when Thompson took the helm. (The inaccurate line about his schooling is in its latest filing and all others.)

Without providing further explanation of how it got there, Yahoo today called the mistake an “inadvertent error” and said it had no bearing on his ability to lead the Silicon Valley Internet giant.

But the long troubled company might be speaking too soon, given that the revelation was uncovered this morning by activist shareholder Dan Loeb of Third Point. Loeb has called into question the vetting process that Yahoo’s directors did to hire Thompson, as part of a proxy fight he is waging to gain several board seats.

And, while such an allegation is normal for an increasingly nasty battle, Loeb has hit his mark with deadly accuracy this time, putting into question both Thompson’s credibility and Yahoo’s obvious botching in its vetting of him.

“If there is a good explanation for the apparent discrepancies regarding the academic records of Mr. Thompson and Ms. Hart, we are confident that it will be provided promptly,” wrote Loeb in a letter to Yahoo’s board today. “However, in the event that there is no good explanation, we expect the Board to take immediate action.”

The Ms. Hart that Loeb was referring to is Patti Hart, the board member who ran Yahoo’s process for hiring a new CEO after it fired Carol Bartz — who does have a CS degree — last year. (In his letter today, Loeb also correctly called into question how she portrayed her own college degree in a more impressive fashion than was accurate.)

The search for a new Yahoo CEO was conducted by headhunter Heidrick & Struggles, which did not have Thompson on its list of candidates, since it had placed him at eBay many years before.

In fact, according to numerous sources, without involvement by Heidrick, it was Thompson who cold-emailed key Yahoo board members, nominating himself for the CEO job. He was quickly brought in for interviews and, presumably, a thorough vetting.

Despite that and despite the fact that eBay’s SEC filings did not list a computer science degree, Hart or others seem to have totally missed the discrepancies and it was added to Thompson’s official Yahoo bio and legal filings.

It’s not clear what happens next or if there are any legal implications, beyond a needed correction by Yahoo with the SEC — which already took the entire line about Thompson’s education off his Web bio today.

Yahoo’s not talking either, with its spokesperson declining to provide any explanation for its lapse or who had maintained that Thompson had that degree when he did not.

It’s essentially a mistakes-were-made-let’s-move-on defense.

I think not, for my part, and a number of prominent Silicon Valley people I spoke to today agreed that these issues tend to spin out of control.

“This is going to get very messy, very quickly,” said one person in a common sentiment I heard.

Maybe, and it’s not clear if the company has to release any details of how this occurred or if its board needs to investigate the situation.

In addition, Thompson himself is probably not at risk unless it can be definitely proved he was the one who misrepresented having the degree in the first place. He can simply say he had no idea who added it to the eBay Web site and that he did not notice it there on on the Yahoo Web site and SEC filings.

While that makes him look careless, how big a deal it becomes with shareholders, as well as Yahoo employees, is also an unknown. While a computer science degree is not a requirement for a CEO of a tech company — both Facebook’s Mark Zuckerberg and Microsoft’s Bill Gates dropped out of college and did pretty well in computer science anyway — tech resume padding, even inadvertent, is not a characteristic that is going endear Thompson to anyone.

Plus, it just handed Loeb a very potent weapon in his fight against Yahoo, the very day after the company said the hedge fund manager’s expertise was not “relevant” to gaining a board seat.

One thing’s for sure: Loeb is most certainly very good at vetting.

Yahoo's Response on CEO's Computer Science ResumeGate: "Inadvertent Error"

Kara Swisher — Thu, 03 May 2012 19:27:37 +0000

A Yahoo spokesperson just confirmed as accurate allegations from an activist shareholder Dan Loeb of Third Point that its CEO Scott Thompson did not have a computer science degree from Stonehill College as claimed on his bio and also in regulatory filings.

He does not, a mistake that the Silicon Valley Internet giant is calling an “inadvertent error.”

Except this is a mistake that goes back more than a half-dozen years, as it is also on the Web site bio at eBay, where he served as president of its PayPal payments unit and its CTO before that.

(Update: Yahoo just removed the line about Thompson’s college degrees from his Web site bio entirely.)

While Yahoo sought to underplay the controversy, it could become a serious issue for Yahoo, both from a credibility and regulatory compliance issue.

It would also call into question — as Loeb does in the letter — the amount of vetting done by Yahoo on the CEO choice, which was conducted by board member Patti Hart.

It gets worse: Loeb also alleged that Hart changed her degree from Illinois State College from business administration to a loftier economics and marketing. And Yahoo admitted it was so, noting the director had a business administration degree, with a specialty in economics and marketing — whatever that means.

But, incompetent vetting by Hart aside, it is how and why Thompson changed his resume that will be at issue.

Here’s one fact that is true: Thompson only has an accounting degree from Stonehill College, near Boston, which he attended from 1975 to 1979.

(Second Update: Stonehill also confirmed that Thompson’s degree was only a Bachelor’s of Science in Business Administration (Accounting).)

Here is, in fact, a screenshot of an alumni newsletter when Thompson got the job at Yahoo earlier this year:

Despite the mistake, however it was made and which presumably serves to burnish Thompson’s tech cred, Yahoo said in a statement that it does not diminish his qualifications to lead the tech company.

Said the statement in full:

“Scott Thompson’s degree at Stonehill College was in bachelor science in accounting. There was an inadvertent error that stated Mr. Thompson also holds a degree in computer science. This, in no way, alters that fact that Mr. Thompson is a highly qualified executive with a successful track record leading large consumer technology companies. Under Mr. Thompson’s leadership, Yahoo! is moving forward to grow the company and drive shareholder value.”

Here’s the definition of inadvertent, for those who don’t know:

1. failing to act carefully or considerately; inattentive
2. resulting from heedless action; unintentional inadvertently

I’d say it’s going to turn out to be a lot more than that, but we’ll see what the board of Yahoo and, ultimately, shareholders, have to say.

(And, ironically, just yesterday Yahoo wrote a letter to shareholders claiming that Loeb did not have “relevant” expertise to be on its board. Turns out, he’s definitely pretty good at vetting.)

Dan Loeb Alleges "Discrepancies" on Yahoo CEO Scott Thompson's Resume Related to Computer Science Degree

Kara Swisher — Thu, 03 May 2012 18:53:08 +0000

The gloves are now really off in the proxy battle for Yahoo.

In a letter to Yahoo’s board, activist shareholder Dan Loeb of Third Point is alleging that the company’s new CEO Scott Thompson has inaccurately added a computer science degree to his resume.

(Update: Yahoo confirmed that Loeb is correct about Thompson not having such a degree and called it an “inadvertent error.”)

Thompson went to Stonehill College, near Boston, from 1975 to 1979, according to his LinkedIn profile, but it does not specify his degree.

(Second Update: Stonehill College also confirms that Thompson only graduated with a Bachelor’s of Science in Business Administration (Accounting).)

And older bios, such as one from his director bio for F5 and one from Forbes, as well as a Stone Hill College alumni newsletter, note that he graduated only with a Bachelor’s of Science in accounting.

But in official bios from his job at eBay as head of its PayPal payments division, as well as on the current Yahoo one, a degree in computer science also appears, along with the accounting degree.

“Scott received a bachelor’s in accounting and computer science from Stonehill College,” read the Yahoo and eBay bios. It is also in Yahoo’s regulatory filings.

According to Loeb’s letter:

I am awaiting a call back from Stonehill about Thompson’s degree, which the college is checking now. And I called Yahoo for comment and also am waiting for that, too.

If Loeb’s allegations are true and Thompson burnished his resume to add educational expertise to lend him more tech credibility, it could become a serious issue for Yahoo.

It would also call into question — as Loeb does in the letter — the amount of vetting done by Yahoo on the CEO choice, which was conducted by board member Patti Hart.

It gets worse: Loeb is also alleging that Hart changed her degree from Illinois State College from business administration to a loftier economics and marketing.

(Update: Loeb is correct. Yahoo said Hart has a degree in business administration, with a specialty in economics and marketing — although I am not sure what that means exactly.)

But Thompson’s educational pedigree is the main issue here, of course, and Loeb is calling for his head if explanations are not provided.

“If Mr. Thompson embellished his academic credentials we think that it 1) undermines his credibility as a technology expert and 2) reflects poorly on the character of the CEO who has been tasked with leading Yahoo! at this critical juncture. Now more than ever Yahoo! investors need a trustworthy CEO,” said Loeb in the letter.

But read it for yourself — here is the full letter from Loeb:

Third Point Letter to Board May 3 Release

Updated S-1: Facebook's Yearly Revenue Growth Up 45 Percent, But Down Six Percent From Last Quarter

Kara Swisher — Mon, 23 Apr 2012 19:13:53 +0000

Facebook filed an updated version of its S-1 public offering document today, which included somewhat disappointing first-quarter financials.

In the new filing with the Securities and Exchange Commission, its fourth update for its upcoming public offering, the social networking giant’s revenue was $1.058 billion, up 46 percent for the year, but down six percent from the previous quarter.

In the first quarter of 2012, Facebook’s net income was $205 million, which was down from $233 million a year ago. The company attributed the decline to rising costs, including in marketing and in research.

Facebook also said its current share price was $30.89 each, which values the entire company at about $77 billion.

Some investors might worry about the latest results, which show a slowing in Facebook’s torrid growth. But Facebook said the quarterly decline was due to seasonality — it was flat in the same period a year ago.

As it noted in the document:

“We believe that our rates of user and revenue growth will decline over time. For example, our revenue grew 154% from 2009 to 2010, 88% from 2010 to 2011, and 45% from the first quarter of 2011 to the same period in 2012. Historically, our user growth has been a primary driver of growth in our revenue. We expect that our user growth and revenue growth rates will decline as the size of our active user base increases and as we achieve higher market penetration rates.”

Its audience, though, was still growing strongly: Facebook also said it had 532 million daily active users, up from 372 million a year ago and 483 million in December. Its monthly active users were up from 680 million last year to just over 900 million and up from 845 million from December.

Facebook also added an explicit figure for average revenue per user, which was $1.21, up six percent year over year. It also said the number of full-time employees grew 46 percent from last year to 3,539 at the end of March.

The last update to Facebook’s regulatory filing for its mid-May IPO was in late March. That one gave investors more information about a patent infringement lawsuit waged by Yahoo — Facebook noted its counter claim in the newest filing — and also its motion to dismiss Paul Ceglia’s legal attempt to garner half of the company. It then included more information about growing engagement by users of the social networking site.

Along with some other minor changes in the new document, Facebook noted, in news that was already known, that it would trade its stock on the Nasdaq market under the ticker symbol “FB.” It also said it had bought photo-sharing start-up Instagram, another piece of old news, and noted its just-struck patent deal with Microsoft.

One new detail about Instagram: Facebook forked over “approximately 23 million shares of our common stock and $300 million in cash” to buy it.

Also, said Facebook, in an interesting new section on its global business:

“In the first quarter of 2012, 50% of our revenue was generated by users in the United States and Canada, a decrease from 54% of our revenue for the first quarter of 2011, and in 2011, 52% of our revenue was generated by users in the United States and Canada, as compared to 58% in 2010, as we experienced more rapid revenue growth in markets such as Germany, Brazil, Australia, and India.”

Here is the whole updated file, if you want to peruse yourself:

4thfbs1update

Here Come the First D10 Speakers: New York Mayor Michael Bloomberg, Entrepreneur Sean Parker, Zynga’s Mark Pincus and More on the Red Hot Seat

Kara Swisher — Fri, 09 Mar 2012 18:40:29 +0000

Even though our D: All Things Digital conference always sells out well in advance every year without our announcing even one single speaker (like this one, too), it’s the action on stage that truly matters.

And in 2012 — which also happens to be the 10th anniversary of the confab of tech and media titans — it’s already shaping up to be another fantastic event in terms of programming, with a lineup of onstage appearances that is sure to make some news.

There are many more very big names to come, but Walt Mossberg and I are pleased to introduce the first group of interviewees, which will give you a glimpse into the firepower we expect at D10 in late May. It is again being held in Rancho Palos Verdes, just south of Los Angeles.

The initial speakers we have confirmed so far include: New York City Mayor Michael Bloomberg; serial entrepreneur Sean Parker, who will appear with Spotify co-founder and CEO Daniel Ek; Zynga founder and CEO Mark Pincus; Federal Trade Commission Chairman Jon Leibowitz; LinkedIn Chairman and VC Reid Hoffman, who will appear with LinkedIn CEO Jeff Weiner; and Skype CEO Tony Bates.

It’s hard to imagine someone we have wanted to have onstage more than Michael Bloomberg, a man of many talents and interests. He’s known worldwide as the 108th Mayor of the City of New York. First elected in November 2001 (and again in 2005 and 2009), he is also one of the most compelling politicians in the U.S. today.

But Bloomberg is also a pioneer in terms of the business of digital news and information technology, having built a huge and groundbreaking media company and information service. Bloomberg (the company) has 310,000 subscribers to its financial news and information service, and more than 15,000 employees worldwide.

There will be a lot to talk about with him, from the upcoming presidential election to the state of our government to the future of innovation, news and technology.

Also sure to be voluble is Sean Parker, the legendary Silicon Valley entrepreneur who has been on the cutting edge of innumerable important digital trends of the recent decade. In 1999, Parker co-founded Napster, the controversial and industry-changing music service, at the age of 19.

He followed up with early contact information service Plaxo, and then shifted over to his critical involvement as founding president of Facebook in its early days as a start-up, an experience which was dramatized in the movie “The Social Network.” Parker continued to found and also invest in companies, from Causes to Spotify to his most recent, Airtime, a social video company that he is doing with his Napster co-founder Shawn Fanning.

Parker will be appearing onstage with Daniel Ek, another serial entrepreneur and technologist, who started his first company in 1997 at the age of 14. The Swedish native later co-founded online music phenom Spotify in 2006, with Martin Lorentzon.

The former CTO of Stardoll and founder of Advertigo leads a company that is changing the way music is delivered and consumed by fans, against a backdrop of intense change in the industry, succeeding even as a plethora of other services have stumbled.

Also a groundbreaker is Zynga CEO and founder Mark Pincus, yet another serial entrepreneur, whose latest effort in the online gaming arena has finally resulted in his biggest success. It recently went public, and now has a nearly $10 billion market cap.

Before founding Zynga in 2007, Pincus had already started three other companies: Push start-up Freeloader in 1995; automated tech-support company Support.com after that; and early social networking site Tribe.net in 2003.

(I met Pincus when he was at Freeloader in Washington, D.C., while writing a profile of him for the Washington Post, so I have enjoyed tracking his progress since then.)

Pincus is also an avid angel investor, with early stakes in Napster, Brightmail, Twitter and Facebook.

Reid Hoffman was another early investor in Facebook, along with many of Web 2.0’s most successful ventures. Well-known in Silicon Valley as an entrepreneur and VC, and recently dubbed the “start-up whisperer” by the New York Times (although I am not sure exactly what that means), he’s also chairman of LinkedIn, the business-networking service that also recently went public (at a $10 billion valuation, too).

He’ll appear with LinkedIn CEO Jeff Weiner, who started out life in Hollywood, but soon made his way to Silicon Valley as a top exec at Yahoo. After running its media division, Weiner spent a short time at venture firms before going operational again at LinkedIn.

What it takes to build and maintain momentum as tech companies move into more mature stages, as well as how the social networking space evolves, are among the many topics on tap for the pair.

The evolution of a start-up phenom — in this case, Internet telephony service Skype — will be among the topics covered by Tony Bates, who is now a president at Microsoft, which bought it last year.

As such, he is responsible, says the software giant in its description of his job, “for overseeing the company’s direction, strategy and overall mission to become a global communications service that will eventually reach billions of users.”

That’s a tall order for Bates, who came to Skype from a top job at Cisco. Bates has deep roots (or maybe, routing?) in the guts of the Internet, having done backbone-engineering strategy for Internet MCI. The U.K. native also holds nine patents.

Lastly, given all the activity we expect will happen between government regulatory agencies and tech companies over the next few years, we felt it was key to bring in FTC Chairman Jon Leibowitz. He has been at the FTC as a commissioner since 2004, but was given the top job by President Barack Obama in 2009.

Among his priorities, according to his bio, is “promoting competition and innovation in the technology sector through law enforcement and policy initiatives; and protecting consumers’ privacy — especially while they are using the Internet.”

Uh-oh!

Leibowitz knows from regulation, having served as the Democratic chief counsel and staff director for the U.S. Senate Antitrust Subcommittee from 1997 to 2000, where he focused on competition policy and telecommunications matters, as well as a similar stint at the Senate Subcommittee on Terrorism and Technology before that.

There will be a lot more speakers to come, of course. But, so far, we think D10 is off and running fast.

Here's Zynga's Filing on $228M HQ Building Deal (For All You Real Estate Types)

Kara Swisher — Tue, 06 Mar 2012 01:40:12 +0000

Zynga bought its San Francisco HQ building for $228 million, the company said in a regulatory filing, which I have embedded below.

Having enjoyed a party or two in the space at 650 Townsend Street over the years — even before it housed the online gaming company, I vaguely recall an epic Devo concert there during Web 1.0 — I can tell you it is a nice space and that Zynga has fixed it up real pretty.

Zynga CEO Mark Pincus — for those who might not know — is a bit of a real estate mogul himself, having housed Zynga and other start-ups in previous buildings he owned.

This one’s all Zynga’s, which sources said will give the fast-growing company — which just went public — an ability to lock in affordable growth space and also host community events.

I vote to bring back Devo ASAP, now that we can trash the place without worrying about the landlord.

ZNGA-20120305-8K-20120302

Stop All That Poking: Facebook Filing Temporarily Crashes SEC Web Site

Kara Swisher — Wed, 01 Feb 2012 22:28:20 +0000

Apparently, Facebook has a lot of friends.

Clickety-clicking ones, whose massive interest in the just-filed IPO of the Silicon Valley social networking giant seems to have temporarily crashed the Securities and Exchange Commission’s EDGAR Web site, where anyone can access regulatory documents on companies.

We’re calling the SEC for comment right now, but the site is still hanging, and sources said the reason is the Facebook initial public offering filing.

Update: It’s back up! Though slow. Still, go government!

Another Update: The SEC got back to us and in response to the question of whether this was related to a Facebook surge, spokesman John Nester said, “Greatly increased traffic that began shortly before 5 pm slowed the public website. We are bringing on additional capacity to handle the load.”

Facebook Board Meeting Today for Final IPO Okays

Kara Swisher — Tue, 31 Jan 2012 22:41:33 +0000

According to several sources close to the situation, the Facebook board has been meeting early this afternoon at its Silicon Valley HQ to give the go-ahead to a massive initial public offering.

Facebook is expected to file regulatory documents as early as tomorrow morning for what will certainly be one of the most-watched IPOs in tech in recent years.

Sources also noted the filing could happen after markets closed tomorrow, too.

While sources said the filing time could still change even later this week, that seems unlikely, especially given the furor over every detail — including entirely meaningless ones — about the much hyped Facebook offering.

But it’s finally here and will be much scrutinized.

As I previously reported, the offering is expected to be below an overblown valuation number of $100 billion that has been widely reported and the amount being raised is also less than the $10 billion being bandied about.

I would tell you those numbers if I knew, but the offering has been locked down tight by Facebook — much different than blabbier recent IPOs from Internet companies. (Heeelllloooo, Groupon!)

That’s because Facebook management has been determined to conduct an IPO with as little drama as possible and is seeking to minimize a bubble atmosphere around the event.

(I might start liveblogging the IPO countdown right now, just to ramp up the noise and send CNBC into a frenzy.)

The board of Facebook is chaired by co-founder and CEO Mark Zuckerberg, who has been the most insistent about conducting the IPO with more deliberation and care.

One notable difference, for certain, has been Zuckerberg’s patience in growing the business before taking Facebook public. Still, it is important to remember that its history has actually been very short in time — the start-up was launched as thefacebook.com from his dorm room at Harvard University in early 2004.

If you are counting, that is only eight years ago.

Google Working to Address Europe's Concerns About Motorola Mobility Deal

Ina Fried — Mon, 12 Dec 2011 18:05:56 +0000

Google confirmed on Monday that the European Union has asked the company for more information as it reviews the search giant’s plans to acquire Motorola Mobility.

The company characterized the request as routine and shrugged off the notion the deal could be blocked.

“We’re confident the Commission will conclude that this acquisition is good for competition and we’ll be working closely and cooperatively with them as they continue their review,” Google said in a statement to AllThingsD.

Motorola shareholders have already approved selling to Google, though the transaction awaits antitrust approvals in the United States, EU and elsewhere.

DOJ to AT&T: We Can Play the Stalling Game, Too

Ina Fried — Fri, 09 Dec 2011 17:03:07 +0000

In the regulatory chess match over AT&T’s plan to buy T-Mobile, the government sure seems to be making some smart moves.

With the Federal Communications Commission threatening to block the deal, and the Justice Department already suing to do the same, AT&T last month pulled its application before the FCC, in hopes that a court would take its side in the DOJ case. The company said it would deal with the FCC once a court heard its case with the Justice Department.

However, the DOJ one-upped the telecom giant on Friday, arguing that the court case should be put on hold, now that AT&T has yanked its application to the FCC to acquire T-Mobile’s licenses.

Check.

Your move, AT&T.

Update: For its part, AT&T general counsel Wayne Watts says the company is “anxious to bring to the American consumer the benefits of increased wireless network capacity and efficiencies that can only arise from combining the resources of AT&T and T-Mobile USA,” and is “eager” to present its case in court.

Motorola Mobility Shareholders Approve Acquisition by Google

Ina Fried — Fri, 18 Nov 2011 01:38:06 +0000

Motorola Mobility said late on Thursday that 99 percent of shares, voting at a special meeting earlier in the day, were in favor of the company’s deal to be acquired by Google.

The company said it is working quickly to complete the deal but, given regulatory filings and other approvals still needed, it will probably be early 2012 before the deal can close. Motorola had said earlier that the deal should close late this year or early next year.

Google is paying $40 per share, or a total of $12.5 billion, for the company.

“We are pleased and gratified by the strong support we have received from our stockholders, with more than 99 percent of the voting shares voting in support of the transaction,” CEO Sanjay Jha said in a statement. “We look forward to working with Google to realize the significant value this combination will bring to our stockholders and all the new opportunities it will provide our dedicated employees, customers, and partners.”

Last month, the company said in a filing that it was cutting 5 percent of its workforce.