They like her, they really like her.

Wall Street, that is, in regards to new Yahoo CEO Marissa Mayer, assigning the former Google exec a clear premium.

And whether it is deserved or not yet from a pure performance perspective — we actually won’t know for several quarters ahead — the shares of the Silicon Valley Internet giant over the past three months have gone up 22 percent. The rise has taken place pretty much on the promise that she will finally be the one to deliver what no other Yahoo leader has done.

And that is, besides making the company relevant and innovative again: Getting Yahoo’s stock past $20 a share again.

That’s within striking distance now. Shares are at $18.40 today, close to an all-time high for the year. The recent rise certainly isn’t taking into account the results of the recent lackluster third quarter, which continued to show the worrisome downward trends — even though partial asset sales of the company’s Chinese Alibaba stake successfully masked the problems — in growth, engagement and overall profitability.

But Mayer’s confident I’ve-got-this tones on the earnings call itself — especially in pushing a mobile strategy that has not been put in place as yet in any substantive way — won over Wall Street investors, who apparently like how she sounds and, thus, are intrigued with what she might do.

While this kind of perceptual game will only get Yahoo so far, moving out of the teens in share price would be an important benchmark for the company.

The stock was last at that level in August of 2008. At the time, in fact, $20 a share was considered very disappointing, taking place after Microsoft dropped its $44.6 billion hostile bid for Yahoo a few months earlier. Indeed, $20 was a big comedown from when Yahoo shares were above $43 in 2006.

The lowest price Yahoo shares got in recent years were $9.39 in November of 2008, just before then CEO and co-founder Jerry Yang stepped down.

Now the stock is close to double that sad trough, fueled in part by some cosmetic moves to improve culture by Mayer — including free food, smartphones and a promise to end the slow-moving decision-making at Yahoo.

There has also been a start of the promised multi-billion-dollar stock buybacks by the company, although Yahoo has been cagey about how and when it is purchasing. Also helping, more recently, is that several big hedge funds are buying into the story of hope.

Following in the footsteps of successful activist shareholder Dan Loeb of Third Point, who is now on the board and is a major Yahoo investor, others like him have now joined in the party in a bigger way. That includes David Einhorn of Greenlight Capital and Chase Coleman of Tiger Global Management.

The thoughtful Einhorn, who is a friend of Loeb’s, has been in and out of the stock before, buying it on hopes that now ousted CEO Carol Bartz would be Yahoo’s savior and selling it soon after it was clear she might not be. He came back in February with three million shares, sold them in May, but now has upped his stake to just over five million more under Mayer’s regime.

More substantively, Tiger’s Coleman has grabbed 25 million shares (interestingly, he’s also upped his stakes in Groupon and Facebook).

Obviously, they must believe Yahoo is set to move upward, which all depends on Mayer. She’s made one critical stock misstep early in her tenure, by announcing that she was considering keeping the huge cash windfall from its sale of Alibaba stock and not giving it back to shareholders in some form.

That dropped Yahoo’s shares to under $15, but Mayer walked back that mistake and the stock has been climbing since.

For the year to date, it’s up almost 14 percent — a nice rise — although that pales in comparison to Apple’s 39 percent rise, Amazon’s 37 percent rise and, most of all, AOL’s 136 percent leap.

The comparison to the massive stock run that AOL has had, after CEO Tim Armstrong — also a former Googler — cut costs, focused units, sold patents and bought back stock, is often made. It’s perhaps apt, but arguably Yahoo has much better and fixable assets than AOL.

More to the point, Yahoo’s price-to-earnings ratio remains unusually low — it’s 5.6, compared to the S&P’s 14.2 average — which means that the entire business is severely undervalued by Wall Street.

It is if Mayer can create real value by actually staging the comeback she is already getting credit for accomplishing. She certainly has a lot of levers to improve results, from the stock buyback to finally making a deal to sell its multi-billion-dollar stake in Yahoo! Japan to making expense cuts to buying some innovative small start-ups to creating products that aren’t, well, lame.

Most importantly, Mayer has to stop the decimation of Yahoo’s once mighty advertising business, which makes up the bulk of its revenue, as well as improve its search monetization by rejiggering its heretofore dysfunctional partnership with Microsoft. (But, as I wrote earlier this week, she will not be making new search engines with Facebook.)

A gander at this chart of Yahoo’s declining quarterly revenue should give you a good visual of the problem with the core business:

YHOO Revenue Quarterly data by YCharts

And, indeed, Yahoo’s sales have dropped 29 percent since 2007, with typically flat display revenue and declining search revenue, which was once Yahoo’s crown jewel. While operating margins have risen over the years, very few point to the company as an exciting growth story.

And it still isn’t, although investors are starting to consider it a possibility. We’ll see as Mayer makes more significant changes in 2013, hopefully underpinning the stock’s recent rise with a true story of financial strides.

But, for now, giddy shareholders probably should not get too far ahead of themselves. Not that you can stop them: Mayer fan Eric Jackson is calling for Yahoo’s stock to be over $40 again by end of 2013.

Whether the Mayer premium can do pull off that particular investor miracle or not remains to be seen.

According to several sources, Yahoo is now on the hunt for a COO — with special emphasis on someone with turnaround experience — presumably to be a worker-bee No. 2 to product-guru CEO Marissa Mayer.

Several Silicon Valley execs and others outside of tech have been contacted by Spencer Stuart, the executive talent firm that is working on a number of other exec searches for Yahoo.

It is not clear if Mayer is on board this plan for a COO and other sources said she has different ideas for the management organization at Yahoo, including an elaborate general manager system that is similar to that at Google. Mayer, who come to Yahoo from the search giant, has put a lot of practices from her former employer in place, from free food to weekly all-hands meetings to more stringent hiring.

In any case, those candidates contacted recently have been told that the company is looking for a top exec with a focus on restructuring and also finance. Presumably, in this scenario, Mayer will focus on product and innovation — her strengths — while the COO would perhaps be responsible for making the trains run on time on the business side of Yahoo. A plethora of employees who have met with her have stressed her intense interest in products, which is mirrored by much less attention to more mundane business issues.

Perhaps the highest profile COO hire of a similar sort has been Facebook’s Sheryl Sandberg, who was brought in at a dicey time for the social networking site to work on the business while co-founder and CEO Mark Zuckerberg focused on its product.

Such an exec could be a good idea, since — despite the wide latitude Mayer has been given to make changes — Yahoo can not afford much damage to its current operations as Wall Street investors wait for her strategy to reinvigorate the company.

In fact, a recent filing in which Yahoo said Mayer was rethinking its promise to return a $4 billion-plus cash windfall from the sales of assets in China to shareholders caused the stock to drop quickly, largely due to a decided lack of information about what she planned to do with the money.

It will be interesting to see who would be intrigued by the mammoth job of helping fix Yahoo, since most think the process will inevitably include major layoffs.

Spencer Stuart’s Jim Citrin worked on the troubled tech giant’s recent CEO search, which ended up in the hiring of the high-profile Google exec. Mayer’s hiring was a public relations coup for Yahoo’s board, especially its large shareholder Dan Loeb of Third Point.

Mayer herself has also been reaching out to her extensive circle of colleagues at Google and elsewhere in tech to come help her turn around Yahoo. Most recently, she has been trying to hire a former Googler Katie Jacobs Stanton, who once worked with Mayer and now runs international efforts for Twitter.

At the same time, several top execs have left Yahoo since Mayer arrived as she conducts a house cleaning and puts her own team into place. That has included its former interim CEO Ross Levinsohn and HR head David Windley. More such departures are expected.

Mayer has also kept execs, including making interim general counsel Ron Bell the permanent one last week. She has also relied heavily on Yahoo co-founder David Filo.

But her new hires have mostly been lower-level ones, made up of staff who had been close to her at Google.

I would ask for comment from Yahoo, but one of those Mayer newbies at Yahoo — Anne Espiritu, who appears to be a ghost — is still sitting on a number of my and other reporter’s requests to comment on various issues that have been completely unanswered. I have now decided to move onto the other two — Patricia Moll Kriese and Andrew Schulte — to see if they disappear too.

At the the Silicon Valley Internet giant’s weekly Friday FYI staff meeting, Mayer told the crowd that Yahoo co-founder David Filo (pictured here) would be reporting directly to her — which I previously suggested would happen — and also that longtime legal exec Ron Bell would become permanent general counsel.

Filo has been an important part of Mayer’s arrival at Yahoo, and was a critical ally in her first days, emerging as a vocal supporter of her appointment from the start.

The typically retiring and taciturn product guru actually gave a quote in a press release, and did interviews when Mayer was hired.

Moving Filo close to her is an important morale booster, because while the founders of Yahoo have their definite ups and downs, as I have previously noted, the heart of the company is still with both Filo and also co-founder Jerry Yang.

Interestingly, he’s actually been reporting for years to a variety of product and tech execs, despite owning more than 6 percent of Yahoo.

The elevation of Bell (pictured here), who was No. 2 to former GC Mike Callahan, is an interesting move. Having been at Yahoo since 1999, after working at Apple, the veteran lawyer played an important role in waging the Facebook patent litigation.

He was named interim GC after Callahan left in late June, by then-interim CEO Ross Levinsohn.

Levinsohn left at the end of July.

We’ll see who else will leave Yahoo this week and next — the fates of a wide range of top execs are in the mix, from CFO Tim Morse to media head Mickie Rosen to sales chief Michael Barrett.

Mayer has been trying to recruit her former Google staffer Katie Jacobs Stanton from Twitter for a big media job. And she has reportedly been making strong efforts to get Barrett — another former advertising exec at the search giant — to stay.

We’ll see about it all soon enough, and also what will happen to Yahoo shares this week.

The stock got pummeled last week, down more than 5 percent on Friday to close at $15.15, after the company revealed in a regulatory filing that there might be a change of plans for the more than $4 billion from the sale of its Alibaba Group stake.

Both Yahoo and one of its biggest shareholders and a director, Dan Loeb of Third Point, had previously said the money would likely be used for a stock buyback, or even a dividend.

Even though Loeb let it leak that he was A-okay with it all, to assuage other angry investors, Mayer will now need to come up with a solid plan for the dough, which could include some acquisitions.

And it might help if she could also perhaps finally land the long-troubled deal to get many more billions from its stake in Yahoo Japan.

While those negotiations have had their ups and downs, it was close to being struck in the summer. But sources said there are still apparently valuation differences.

(I would add comment or no comment from Yahoo, as I do with every other company I cover. But after numerous emails, I am still waiting to hear back from the company’s PR spokeswoman, whom I am sure has just been super busy.)

Yahoo just filed a regulatory document noting that it might not give back the bulk of the $4 billion-plus that it is expecting to get from its sale of a chunk of its Alibaba stake to shareholders, as it had previously said it would, either via a stock buyback or dividend.

Instead, CEO Marissa Mayer looks like she wants all that dough to buy some tasty companies.

The filing noted that Mayer’s recent look-see review of Yahoo, “may lead to a reevaluation of, or changes to, our current plans, including our restructuring plan, our share repurchase program, and our previously announced plans for returning to shareholders substantially all of the after tax cash proceeds of the initial share repurchase.”

Yahoo’s stock is down about five percent on the news, in after-hours trading, to $15.28. It had been moving up slowly in recent weeks.

That’s because, for investors, this is a drastic reversal of previous Yahoo statements on what it was going to do with the windfall. At the time of the deal and then later in several statements by its top execs, Yahoo said it would return the most of the money to shareholders.

“We look forward to delivering the proceeds of the near-term transaction to our shareholders,” said CFO Tim Morse at the time of the deal’s announcement in May, which he later reiterated on an earnings call.

Related to the deal, the Yahoo board had also recently authorized its execs to conduct a larger stock buyback, although the company was under no legal obligation to do so.

In addition, in a recent letter to his investors, Third Point’s Dan Loeb — now a Yahoo director and in charge of a six percent stake — said the company “has indicated that it will return substantially all of the expected $5B of cash it will receive from this transaction to shareholders.”

No longer — at least for most of the incoming pile of moolah from China.

Still, the move probably should come as no surprise, given Mayer is already on the prowl for innovative companies to buy and talent to “acqhire.”

She’ll certainly need a bigger war chest, since Yahoo only has just above $2 billion in cash now, not all of which is available (long accounting reason I will go into later).

The big slug of Alibaba money, from selling half of Yahoo’s stake in the Chinese company, will obviously give her more heft.

So, too, would any money she might get from a deal around Yahoo’s Japanese assets. The company has been in protracted talks with SoftBank, its partner there, about such a sale. While sources said it was close to completion, there appears to still be some roadblocks to its final settlement.

Depending on how such a transaction is completed — tax-free or not — Yahoo could get about $3 billion in cash and perhaps another asset worth $1.5 billion.

That would certainly give Mayer a bigger kitty to do acquisitions — and presumably make lots of friends in Silicon Valley in the process.

Here is the pertinent section of the filing:

New Chief Executive Officer and Review of Business Strategy

On July 17, 2012, Marissa Mayer became the Chief Executive Officer and a member of the Board of Directors of Yahoo! Inc. (the “Company”). As reported in our Form 10-Q for the quarter ended June 30, 2012 filed today with the Securities and Exchange Commission, Ms. Mayer is engaging in a review of the Company’s business strategy to enhance long term shareholder value. As part of that review, Ms. Mayer intends to review with the Board of Directors, among other things, the Company’s growth and acquisition strategy, the restructuring plan we began implementing in the second quarter of 2012, and the Company’s cash position and planned capital allocation strategy. This review process may lead to a reevaluation of, or changes to, our current plans, including our restructuring plan, our share repurchase program, and our previously announced plans for returning to shareholders substantially all of the after tax cash proceeds of the initial share repurchase under the Share Repurchase and Preference Share Sale Agreement we entered into on May 20, 2012 with Alibaba Group Holding Limited.

And here is the whole filing:

YHOO-20120809-8K-20120809

Two people I spoke to — both of whom declined to be identified — in Silicon Valley separately said they had been contacted by a lawyer at the FTC’s Bureau of Competition inquiring about the circumstances of their contact with Third Point manager Dan Loeb (pictured here), specifically around the time that he first began buying large chunks of Yahoo last year as part of an activist shareholder action. Loeb is currently a director on the Yahoo board.

One of those people contacted was told by the FTC attorney that it was related to a “non-public investigation,” although the lawyer did not reveal specifically what the line of inquiry was about.

But another source said that it was related to the Hart-Scott-Rodino Antitrust Improvement Act (HSR Act) and its filing requirements.

The antitrust law, designed to prevent anticompetitive mergers or acquisitions, according to the FTC Web site, “requires companies to report any deal that is valued at more than $66 million to the agencies so they can be reviewed.”

In addition, according to FTC information, “the HSR Act requires that under some circumstances, individuals who acquire voting securities must notify the FTC and Department of Justice and observe a waiting period before completing the acquisition.” The waiting period is typically 30 days, which can be waived by the FTC.

An FTC spokesman declined to comment about any possible inquiries by its staff.

Third Point also declined to comment.

I reached out to a Yahoo spokeswoman, and am also awaiting a comment.

But another source said the Yahoo board was aware of the FTC scrutiny and does not consider it a serious issue.

To be clear, there has been no action by the FTC against Third Point and many such inquiries never lead to a finding that any violation occurred and are a routine part of the agency’s oversight job.

In addition, if a violation did occur, it also might have been technical and inadvertent or due to faulty advice from counsel.

That was the case in a $500,000 fine paid to the FTC by Comcast CEO Brian Roberts last December.

In addition, the FTC then determined that Roberts also got no financial gains from the filing violation and also reported the problem soon after it was discovered.

Previous to that, the FTC has settled with a variety of investors, including hedge funds, over violations of HSR filing requirements.

Neither Third Point nor Loeb has ever been subject to such any such action by the FTC. He is an experienced investor who is well known for his “poison pen” and pugnacious manner.

“The hedge-fund manager competes in triathlons, never, ever drinks from a plastic water bottle and is unsparing at times in his criticism of corporate executives,” a recent article in The Wall Street Journal noted.

Loeb definitely took clear and unflinching aim at Yahoo last September with his $8.7 billion fund, disclosing that he had acquired a more than five percent stake in Yahoo, proceeding to wage a proxy fight to gain board seats.

At the time, he paid about $11 per Yahoo share. It has recently been trading in the $15 to $16 range.

Despite a lot of noisy agitation, Loeb’s big break came only after he uncovered a fake computer science degree on the resume of then CEO Scott Thompson earlier this year. The result: Yahoo’s directors ousted Thompson and settled with Loeb by giving him three board seats.

In addition, a number of Yahoo directors whom he had attacked stepped aside, including then Chairman Roy Bostock, and a nearly new board was put in place.

Yahoo’s shares have rise 17 percent since Loeb became a major investor, although its stock is down for 2012.

Since he joined as a director, the aggressive money manager seems to be calling the shots at the company, despite not being the chairman of the board.

That has included pushing hard for the appointment of a new CEO, former Google exec Marissa Mayer, as well as involving himself in initial talks to settle the patent lawsuit it had filed against Facebook and also in other deals.

After Mayer was appointed, Loeb has since added even more shares, assembling a more than six percent stake in Yahoo that is worth $1.2 billion.

That’s a $150 million paper gain for Loeb so far, said the Journal. That tidy sum, along with his board victory and the well-received appointment of Mayer, has caused the voluble Loeb to make a series of calls to a number of execs in Silicon Valley he has recently gotten to know via incessant and tireless networking to tout his win.

“He’s very proud of himself and really seems to be enjoying being the guy to force change at Yahoo,” said one person Loeb has dialed up recently to chitchat. “It’s his version of humblebrag.”

Humblebrag, indeed. In a second-quarter letter to his investors last week, Loeb was practically doing a victory dance about Yahoo in one section, which you can see below in its entirety:

Third Point’s investment in Yahoo! appreciated 4% during the second quarter. Due to Yahoo!’s concentrated size in our funds, this modest appreciation still made it the biggest winner for the period.

We were pleased to have favorably resolved the proxy contest we commenced in Q1. Following a subsequent kerfuffle involving misstated academic records of its then‐CEO and a now former board member, Yahoo!’s directors determined that it was in the best interests of the Company to invite our nominees Daniel Loeb, Michael Wolf, and Harry Wilson onto the board.

Since we joined the Board in mid‐May, Yahoo! has achieved three significant milestones. First, Yahoo! and Alibaba, the privately held Chinese internet company in which Yahoo! owns a 40% stake, reached an agreement for Alibaba to repurchase about half of that position at an attractive valuation. This agreement provides pricing transparency and a path to liquidity for this key Yahoo! asset, and is expected to close sometime in Q3. Yahoo! has indicated that it will return substantially all of the expected $5B of cash it will receive from this transaction to shareholders. Second, the Company was able to amicably settle a patent lawsuit filed in the first quarter against Facebook, one of its largest partners, resulting in a new, expanded partnership between the two companies.
Lastly, Yahoo recently appointed Marissa Mayer as CEO. Mayer, a Stanford graduate with a B.A. in Symbolic Systems and M.S. in Computer Science, was Google’s 20th employee when she joined the fledging company in 1999. During her 13 years at Google, she oversaw the design of numerous well‐known products and was responsible for its iconic home page design. Mayer is a leading innovator in Silicon Valley whose creative vision made her a critical part of Google’s leadership team. Her appointment was received favorably by employees and the tech community. We were very pleased to have had the opportunity to work with our fellow directors towards this extremely positive outcome and wish Marissa the best.

The appointment of Marissa Mayer as CEO of Yahoo earlier today was a definitively splashy move by the board of the troubled Internet giant.

And a key impresario of the showy hiring of the high-profile Google exec? None other than Yahoo’s former foe now turned driving force Daniel Loeb of the Third Point hedge fund.

It was classic Loeb style — brash, quick and done with an eye to the optics of the move as well as its impact.

The selection of the high-profile Mayer was unanimous among the Yahoo directors, who have now clearly gone in a product direction over a media one, represented by interim CEO Ross Levinsohn.

The choice came down to Mayer or Levinsohn and, in this, there really was no choice to speak of given her much more honed tech and product pedigree.

Mayer was integral to the early days of Google especially, in charge for a long time over its search product. More recently, though, she had been working on local efforts.

But, it was notable to many inside and outside the company that she did not get one of the key senior vice president nods at Google in a major reorg of the company under new CEO Larry Page.

“She was pretty much voted off the island, even though she was critical to its earliest successes,” said one person close to the situation.

Recently, multiple sources said she had been quietly seeking an exit from the search giant, including considering several venture firms. She also recently joined the board of retail giant Walmart.

Loeb, who had met Mayer relatively recently, was one of the key forces in pushing the board to consider aiming for someone of her level.

In fact, multiple sources said that he has become an influential voice — perhaps the most influential — on the board. While there has been a search committee run by director David Kenny, Loeb has also been actively buttonholing prospects, including focusing his early CEO search efforts on Hulu’s Jason Kilar.

That did not pan out, as Kilar withdrew himself from contention, but sources said Loeb kept pushing for a big name who would burnish Yahoo’s bruised reputation.

It’s all part of a series of efforts by the New York hedge fund head — who has been spending a lot of time of late trying to learn the complicated byways of Silicon Valley — to be more than just a smash-and-grab money man.

Loeb now owns close to six percent of Yahoo and is intent on reviving its prospects and, more importantly, its moribund stock.

And nabbing Mayer — who often appears in glossy magazine spreads, part of an effort that she has promoted that has made her the face of the search giant over the last decade — fits into that strategy well.

Indeed, Mayer will now be charged with the difficult task of creating innovative products to win at Yahoo going forward and even competing with Google in some arenas.

It’s clear she will attract talent, and is reportedly considering several other current and former Googlers to bring on board at Yahoo.

It will take a lot of such deep expertise, given Yahoo’s dicey prospects of late, with problems ranging from its advertising technology to weak morale to, perhaps most importantly, the continued lack of a clear strategic direction.

Whether Mayer can stem the tide is unclear, with some comparing her task to an even bigger version of the massive challenges and slow turnaround another former Googler, Tim Armstrong, has faced at AOL.

“Is she the Tim show, part 2, or can she remake Yahoo into a successful narrative going forward?,” said one person close to the situation.

One thing’s for certain: Today, at least, it was also the Dan Loeb show.

Here’s the good news: The nearly-new board of Yahoo is chock-full of experienced and active operators from a variety of backgrounds that are critical to the future of the Silicon Valley Internet giant.

And the bad news? The nearly-new board of Yahoo is chock-full of experienced and active operators from a variety of backgrounds that are critical to the future of the Silicon Valley Internet giant.

In others words, in almost completely upending its director roster over the last several months, Yahoo has given itself a new lease on life, but has also created a significant challenge in forming a cohesive governing structure that can work together in fixing all that ails Yahoo.

Among the important decisions that this new boy band — and they are, as usual, all men save for one woman — has to come to agreement on within the next months: Settling its patent-infringement lawsuit with Facebook; deciding on a permanent CEO — either selecting current interim leader Ross Levinsohn as permanent or someone else; approving a strategic plan for the company that actually sticks; and, most of all, figuring out a governance style that is strong without being too meddlesome.

Which should make Yahoo’s annual meeting on July 12 much more interesting than most.

One thing is clear: The days of overwhelming control in the hands of a few directors — as has been the case in recent years under departed Chairman Roy Bostock — are over.

In its place is a situation with a number of strong factions under new Chairman Fred Amoroso, who appears to have taken a consensus approach to managing the board.

It’s not as if he had a whole lot of choices, said numerous sources, especially noting the aggressive involvement of activist shareholder Daniel Loeb of Third Point — who joined the board with two others in the settlement of a proxy fight — in all aspects of Yahoo of late.

Along with helping finally complete a partial sale of Yahoo’s assets in China, Loeb has also be active in discussions with Facebook over a patent settlement, and has also been searching for new board members and possible new execs for Yahoo.

“Dan has a lot of ideas,” said one person close to the situation, “and he is not shy about communicating them.”

To be fair, it’s a welcome change from the lackluster performance of the previous board, which seemed almost comatose at times as Yahoo pinged from one crisis to the next.

And Loeb is also joined by several other directors who are taking a more substantive role, including Weather Channel CEO David Kenny, American Express CMO John Hayes and former Discovery Communications COO Peter Liguori.

“Every one of them has a lot to say and has definite opinions on what needs to be done, since most have run major businesses,” said another Yahoo source. “Which either means 11 times the noise, or 11 times the help.”

Or, perhaps, 11 times the fun (but only for me).

Speaking of fun, here’s the comely One Direction showing how it’s done, in the music video “What Makes You Beautiful”:

Yahoo’s board has hired Spencer Stuart in yet another CEO search, although sources close to the company said that interim leader Ross Levinsohn is the prime candidate for the position at this point.

“It’s Ross’s to lose,” said one person close to the situation.

Levinsohn was appointed to the job on a temporary basis after the Silicon Valley Internet giant’s last CEO, Scott Thompson, was ousted after a resume-padding controversy.

At the time, the board indicated that there would be a search, although Yahoo Chairman Fred Amoroso said in an employee meeting that he was hoping Levinsohn would get the job.

Still, the move by the company’s directors could add more uncertainty to the already volatile mood at the Silicon Valley Internet giant, which has been rocked by a series of major changes in recent months.

Along with the Thompson fracas and a massive layoff, the board has had a massive turnover — including adding activist shareholder Daniel Loeb of Third Point and two of his colleagues, Michael Wolf and Harry Wilson.

Interestingly, all of the 11 directors are considered independent, according to a proxy filing Yahoo made earlier today.

And — in my humble opinion — they are also all pretty aggressive in their interest in helping run Yahoo beyond the typical board’s job of overall corporate governance.

Case in point: Several board members, along with Levinsohn, have been involved in serious negotiations to settle its patent infringement litigation with social networking giant Facebook.

Oh, it’s a very mouthy group — which is likely to give pause to any experienced exec who Spencer Stuart might query about the very difficult job of turning around Yahoo. (I truly feel for anyone who runs Yahoo, what with listening to all that expected backseat driving and kibitzing.)

The selection of Spencer Stuart is interesting, given that Heidrick & Struggles had done Yahoo’s previous search. But that talent search firm had gotten into it with Thompson, who accused Heidrick of adding a fake computer science degree to his bio. Heidrick vehemently denied the allegation.

The board members of the nominating committee in charge of the search are David Kenny, John Hayes, Thomas McInerney and Wolf. Kenny, who was once considered a Yahoo CEO contender (he now is CEO of the Weather Channel), is chair of the group.

Until we get some clarity, here is Yahoo’s proxy filed today, with all kinds of interesting info to chew on:

YHOO-20120604-DEF14A-20120712

Top execs at Yahoo and Facebook have been hammering out the outlines of a deal over the last several days to end their contentious patent infringement litigation, according to multiple sources close to the situation.

While that could change, sources said a settlement could happen in the coming weeks and that the advanced negotiations will put aside the lawsuits and counterclaims between the one-time close partners and return them back to what could be an even closer relationship.

The key terms being discussed, said sources, include a massive cross-licensing of patents between the Internet giant and the social networking kingpin and an even deeper integration of Facebook into Yahoo and vice versa, which has been a key element of improved engagement of late on Yahoo.

One possible glitch: While Facebook has indicated a willingness to perhaps buy some of Yahoo’s valuable patents, sources said the company is not likely to fork over a massive cash payment to Yahoo as part of a deal.

In a slap to Yahoo’s lawsuit, Facebook recently paid Microsoft $550 million to both buy and also license key patents that the software giant had acquired from AOL, and sources said it is unlikely to do the same for Yahoo.

“Facebook paid a lot of money for patents already, just not to Yahoo,” said one person close to the situation.

That could be a tough reality to swallow for Yahoo, especially since its lawsuit was predicated on the notion that it could get a huge payoff from Facebook in any settlement.

That was the argument used by former CEO Scott Thompson, under whose leadership the legal action was first filed, to convince Yahoo’s board to move forward. The lawsuit caused much consternation in Silicon Valley, but Yahoo’s directors had been told that success could mean many billions of dollars from Facebook to end the fight.

But Thompson was recently ousted from his job over a resume-padding controversy, and it appears that Yahoo board members who pushed for the lawsuit are now distancing themselves from its filing.

In other words, it was all Scott’s fault, so now that he’s gone: Bygones!

Let’s be clear: It wasn’t his doing alone by any means, but Yahoo is now facing an uphill and long-term battle in the case to win anything at all.

That’s why its new interim CEO, Ross Levinsohn, along with several board members, including Third Point’s Daniel Loeb, have stepped up talks.

(Yahoo’s on a bit of a goodwill mission, recently adding activist shareholder Loeb as a Yahoo director after settling its proxy fight with him, as well as finally completing a complex asset sale deal with China’s Alibaba Group.)

Interestingly, for Yahoo’s side, this negotiation now appears to be more of a group effort — with board members actively involved — than a solo performance by Levinsohn as the company presses for a solution now.

Facebook is also very motivated to get rid of the problem, especially because its recent borked IPO has taken up a lion’s share of the media and investor perception and attention. Sources said execs there hope that a successful settlement with Yahoo — as well as an expected announcement of an integration with Apple’s iOS at the Worldwide Developers Conference in mid-June — will return the focus to forward momentum by Facebook.

To underscore the importance of settlement, the discussions are being led by the social networking site’s powerful COO, Sheryl Sandberg, along with its VP of partnerships, Dan Rose.

Sandberg and Levinsohn (and his posse of hey-can-I-help-too Yahoo directors) talked in depth about the settlement at the recent 10th D: All Things Digital conference earlier this week, after a number of previous discussions had already taken place.

AOL filed an investor presentation with the Securities and Exchange Commission today tooting its own horn, in prep for its upcoming annual meeting in which it is still facing a proxy challenge.

In a nutshell, readying to battle an alternate slate put up by Starboard Value: Our stock more than doubled from all-time lows of last summer; our turnaround is turning; we sold a buttload of patents that netted us a truckload of cash; and, of course, we’re not going to settle like Yahoo did with Daniel Loeb of Third Point, because CEO Tim Armstrong’s resume is fine and dandy, thank you very much!

(Okay, I made up the last one, but I am peckish today.)

In any case, AOL shares have indeed been on a fast upward move since the $1 billion patent sale, up 103 percent in the last six months, to close at $27.61 today.

Enjoy the pretty AOL slides:

AOL_Investor_Deck_May24

AOL-20120524-DFAN14A-0

AOL_Investor_Presentation_Release_May24

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.

RELATED POSTS:

• Yahoo’s Parting With Thompson Will Be for “Cause” (a.k.a. CSLie)
• Ross Levinsohn’s Yahoo Plan: Back to the Future
• Here’s New Yahoo CEO’s First Note to Troops! (The Leaking-Internal-Memos-to-ATD Policy Remains in Effect As Usual)
• Yahoo Officially Confirms ATD Report on CEO Changes and Proxy Settlement
• Meet the Man I Call “The Hair”: The Video Stylings of Yahoo’s Newest CEO Ross Levinsohn
• Will Thompson’s Ouster Mean a Yahoo-Facebook Patent Settlement Too?
• Exclusive: Yahoo’s Thompson Out; Levinsohn In; Board Settlement With Loeb Nears Completion
• Heidrick & Struggles Slaps Back at Thompson’s Yahoo in Blame Game Over ResuMess
• Is He In or Is He Out? Crunchtime for Scott Thompson at Yahoo.
• Not So Scott Free? Yahoo’s Other Big Shareholder — Cap Re — Leaning Toward Supporting Loeb Over Thompson ResuMess.
• Tech Nation’s Gunn Says She and Yahoo CEO Discussed Their CS Degrees Before 2009 Show (Video and Audio)
• Loeb Calls Again for Thompson Firing From Yahoo, as Former eBay Boss Supports Him
• Place Your Bets: Will Loeb Drop Another Bomb on Yahoo at Vegas Confab Later Today?
• Exclusive: Yahoo Director in Charge of Botched CEO Vetting to Step Down From Board
• CEO Says Sorry to Yahoos for Borked Bio “Distraction” — But Will Mea Culpa Work Without an Apology for Error? (Memo)
• Buffett Comments on Trust Issue in Yahoo CEO BioGate: “You’ve Got a Problem”
• Loeb Lobs Lawsuit, as Expected, at Yahoo’s Borked Bio Mess
• As Yahoo CEO Reaches Out to Top Staff, Board Meets to Weigh “Options” (I.E., Deciding Who Gets to Take the Borked Bio Blame)
• Yahoo Should Expect Incoming Lawsuit Lobbed by Loeb Tomorrow on CEO Hiring
• They Shoot Yahoo CEOs, Don’t They? But Not Without a Really Smoking Gun and a Much Stronger Board.
• Yahoo’s Thompson Asks Employees to “Stay Focused” — Except Not on Him
• In 2009 Interview, Yahoo CEO Does Not Deny He Has a CS Degree, and Calls Himself an “Engineer” (Audio)
• Yahoo’s Board Will “Review” Resume Discrepancy of CEO
• How Did a Phantom CS Degree Get on CEO’s Bio in SEC Filings? Yahoo’s Not Saying.
• Yahoo’s Response on CEO’s Computer Science ResumeGate: “Inadvertent Error”
• Dan Loeb Alleges “Discrepancies” on Yahoo CEO Scott Thompson’s Resume Related to Computer Science Degree

Here you go, on what I reported earlier today on Yahoo CEO Scott Thompson stepping down, being replaced by current global media head Ross Levinsohn on an interim basis, the naming of board member Fred Amoroso as chairman and director changes related to the settling of its proxy fight with Third Point’s Daniel Loeb. The company is confirming the whole thing in an official press release.

The news brings to a close Yahoo’s latest controversy, involving a fake computer science degree that somehow was on Thompson’s bio and also in official filings of the Silicon Valley Internet giant.

As you can see, the statements have almost zero to say about Thompson. Sources said that the board reached a settlement with him — I am trying to find out more, natch — after more and more problematic issues cropped up in recent days.

But for now, I am going to buy myself some Mother’s Day chocolates and find my kids:

YAHOO! NAMES FRED AMOROSO CHAIRMAN AND APPOINTS ROSS LEVINSOHN INTERIM CEO

BOARD ANNOUNCES SETTLEMENT WITH THIRD POINT LLC

Sunnyvale, Calif. — May 13, 2011 – Yahoo! Inc. (NASDAQ: YHOO) today announced that the Board of Directors has named Fred Amoroso as Chairman of the Board of Directors and Ross Levinsohn as interim Chief Executive Officer, effective immediately. The Company also announced that its Board has reached an agreement with Third Point LLC (“Third Point”) to settle its pending proxy contest related to the Company’s 2012 annual meeting of shareholders.

Mr. Amoroso replaces Roy Bostock, who has stepped down from his role as Non-Executive Chairman in order to accelerate the leadership transition for the new Board. Mr. Levinsohn replaces Scott Thompson, former Chief Executive Officer, who has left the Company.

Under the Board’s settlement agreement with Third Point, three Third Point nominees — Daniel S. Loeb, Harry J. Wilson, and Michael J. Wolf — will join the Yahoo! Board, effective May 16, 2012. Mr. Bostock, along with Patti Hart, VJ Joshi, Arthur Kern and Gary Wilson, all of whom previously disclosed their intentions not to stand for re-election, as well as Mr. Thompson, have decided to step down from the Board immediately.

As a part of the settlement agreement, Third Point, which owns an aggregate of 70,545,400 shares, or 5.8% of Yahoo! common stock, has agreed to withdraw its previous Board nominations for consideration at the annual meeting and vote its shares in support of Yahoo!’s nominees. Yahoo!’s slate of director nominees for election or re-election at the 2012 annual meeting of stockholders will now include Fred Amoroso, John Hayes, Peter Liguori, Thomas McInerney, Maynard Webb, Sue James, David Kenny, Brad Smith, Daniel S. Loeb, Harry J. Wilson and Michael J. Wolf.

As interim CEO, Mr. Levinsohn will manage the Company’s day-to-day operations with assistance from Yahoo!’s existing senior leadership team.

“The Board is pleased to announce these changes and the settlement with Third Point, and is confident that they will serve the best interests of our shareholders and further accelerate the substantial advances the Company has made operationally and organizationally since last August. The Board believes in the strength of the Company’s business and assets, and in the opportunities before us, and I am honored to work closely with my fellow directors and Ross to continue to drive Yahoo! forward,” said Fred Amoroso, Chairman of the Yahoo! Board of Directors.

Mr. Amoroso continued, “On behalf of the entire Board, I would also like to thank Patti, VJ, Arthur, Gary and, in particular, Roy, for their dedicated long-term service and contributions to the Board and Yahoo!.”

Third Point Chief Executive Officer Daniel S. Loeb stated: “Harry, Michael and I are delighted to join the Yahoo! Board and work collaboratively with our fellow directors to foster a culture of leadership dedicated to innovation, excellence in corporate governance, and responsiveness to users, advertisers and partners. We are confident this Board will benefit from shareholder representation, and we are committed to working with new leadership to unlock Yahoo!’s significant potential and value.”

Third Point Director Nominee Jeff Zucker stated: “I have been supportive of Third Point’s efforts since Daniel asked me to join the slate. When I became aware of Yahoo!’s offer of three board seats to Third Point, I approached Daniel and let him know that I would be happy to step aside to quickly facilitate a settlement. I believe that it is in Yahoo!’s best interests to avoid a prolonged proxy fight and have new board members immediately to help move the company forward. While there is clearly much work to be done, this is the right combination of talented executives to do just that.”

RELATED POSTS:

• Yahoo’s Parting With Thompson Will Be for “Cause” (a.k.a. CSLie)
• Ross Levinsohn’s Yahoo Plan: Back to the Future
• Here’s New Yahoo CEO’s First Note to Troops! (The Leaking-Internal-Memos-to-ATD Policy Remains in Effect As Usual)
• Yahoo Officially Confirms ATD Report on CEO Changes and Proxy Settlement
• Meet the Man I Call “The Hair”: The Video Stylings of Yahoo’s Newest CEO Ross Levinsohn
• Will Thompson’s Ouster Mean a Yahoo-Facebook Patent Settlement Too?
• Exclusive: Yahoo’s Thompson Out; Levinsohn In; Board Settlement With Loeb Nears Completion
• Heidrick & Struggles Slaps Back at Thompson’s Yahoo in Blame Game Over ResuMess
• Is He In or Is He Out? Crunchtime for Scott Thompson at Yahoo.
• Not So Scott Free? Yahoo’s Other Big Shareholder — Cap Re — Leaning Toward Supporting Loeb Over Thompson ResuMess.
• Tech Nation’s Gunn Says She and Yahoo CEO Discussed Their CS Degrees Before 2009 Show (Video and Audio)
• Loeb Calls Again for Thompson Firing From Yahoo, as Former eBay Boss Supports Him
• Place Your Bets: Will Loeb Drop Another Bomb on Yahoo at Vegas Confab Later Today?
• Exclusive: Yahoo Director in Charge of Botched CEO Vetting to Step Down From Board
• CEO Says Sorry to Yahoos for Borked Bio “Distraction” — But Will Mea Culpa Work Without an Apology for Error? (Memo)
• Buffett Comments on Trust Issue in Yahoo CEO BioGate: “You’ve Got a Problem”
• Loeb Lobs Lawsuit, as Expected, at Yahoo’s Borked Bio Mess
• As Yahoo CEO Reaches Out to Top Staff, Board Meets to Weigh “Options” (I.E., Deciding Who Gets to Take the Borked Bio Blame)
• Yahoo Should Expect Incoming Lawsuit Lobbed by Loeb Tomorrow on CEO Hiring
• They Shoot Yahoo CEOs, Don’t They? But Not Without a Really Smoking Gun and a Much Stronger Board.
• Yahoo’s Thompson Asks Employees to “Stay Focused” — Except Not on Him
• In 2009 Interview, Yahoo CEO Does Not Deny He Has a CS Degree, and Calls Himself an “Engineer” (Audio)
• Yahoo’s Board Will “Review” Resume Discrepancy of CEO
• How Did a Phantom CS Degree Get on CEO’s Bio in SEC Filings? Yahoo’s Not Saying.
• Yahoo’s Response on CEO’s Computer Science ResumeGate: “Inadvertent Error”
• Dan Loeb Alleges “Discrepancies” on Yahoo CEO Scott Thompson’s Resume Related to Computer Science Degree

Yahoo’s embattled CEO Scott Thompson (pictured here) is set to step down from his job at the Silicon Valley Internet giant, in what will be dramatic end to a controversy over a fake computer science degree that he had on his bio, according to multiple sources close to the situation.

The pair will apparently say he is departing for “personal reasons.” Sources said that Thompson will be claiming to be leaving due to a serious illness that he recently discovered he had.

But the evolving crisis — which is just over a week old — centered on his botched resume and how he handled the thorny issue is the key reason for the abrupt end to his tenure as a CEO.

Thompson’s likely replacement on an interim basis will be Yahoo’s global media head Ross Levinsohn, who most recently also ran its Americas unit, including its advertising sales.

In addition to the management upheaval, Yahoo’s board is closing in on a settlement with the man who discovered Thompson’s misstep, activist shareholder Daniel Loeb of Third Point, said sources.

The situation could change, since Yahoo’s full board still has to meet this morning to officially approve the sweeping changes at the long-troubled company.

But, if it is, this development goes a long way toward fixing some of what has been ailing Yahoo recently.

And it’ll also be a stunning victory for Loeb (pictured here), since the pugnacious hedge fund investor is set to get three board seats from a slate proposed by him as part of a proxy fight aimed at Yahoo. The new Yahoo directors will be media exec Michael Wolf and turnaround specialist Harry Wilson. Loeb’s fourth selection — former NBC head Jeff Zucker — will withdraw.

The five current Yahoo directors — who were to step down at the company’s annual meeting this summer — will leave the board effective immediately, sources said, to make way for the Third Point selections.

Finally, Yahoo’s recently added director Fred Amoroso will be named chairman of the board.

Amoroso is the director who has been conducting the investigation into the issues raised by Loeb about how the fake academic credentials got in Thompson’s public bios, as well as in Yahoo’s regulatory filings, and also the hurried circumstances around his hiring in January.

Those mysteries — read, screw-ups — might never be solved now, although Thompson made a convoluted attempt to explain it all in two awkward employee meetings at the end of last week. In those gatherings, according to numerous sources, he blamed a headhunting firm for introducing the mistake when he was being hired for a job at eBay in the mid-2000 timeframe.

That company, Heidrick and Struggles, slapped back last week with an internal memo, noting that Thompson’s claim was “verifiably not true.” Sources said that Heidrick told Yahoo’s board that it was in possession of a resume that Thompson had apparently submitted showing the inaccurate CS degree on it.

That memo, impugning Thompson’s credibility, was one of many that piled on to create an impossible situation for the Yahoo board, related to his leadership ability going forward.

Thompson had also previously issued a Yahoo statement, in which he apologized for the “distraction” caused by the problematic resume, but not for the mistake itself.

And, initially, Yahoo — under his direction — had called the borked resume an “inadvertent error.”

Such fumbling to fix the situation was among the many other issues that the board has been considering relating the ability of Thompson to remain in his job. Also of importance was the sinking morale of Yahoo employees, who had largely rejected Thompson’s excuses in the ResuMess scandal.

Internal message boards at Yahoo lit up all last week, with staffers largely rejecting his explanations. In addition, a number of top execs and engineers approached the board calling for Thompson’s firing.

While that’s not precisely what happened here, it’s close enough to describe Thompson’s departure as inevitable.

All this change comes in the wake of a massive restructuring he was in the midst of at Yahoo, after 2,000 employee layoffs.

Thompson was pushing forward a vision of adding a much more significant data and commerce element to Yahoo’s largely ad-based business.

That is likely to be less stressed under media-focused Levinsohn, who will be essentially trying out to be the permanent CEO.

Well known in the media and advertising communities, he has worked at a number of big online efforts over many years.

According to his bio at Yahoo, where he arrived in 2010:

He previously served as the President of News Corporation’s Fox Interactive Media, where he was responsible for the day-to-day operations, strategy and acquisitions that helped transformed the company into a leader in digital media. He also held senior management positions with AltaVista, an early pioneer and leader in search, CBS Sportsline where he oversaw all content and development for the top rated sports site, and HBO where he launched and oversaw a unit developing new programming and revenue streams. Levinsohn also was the co-founder and managing director of Fuse Capital, an investment and strategic equity management firm focused on investing in and building digital media and communications companies.

Levinsohn sits on the board of Freedom Communications and the Bogart Pediatric Cancer Research Program. He holds a Bachelor of Arts in Communications from The American University.

So far in my checking, Levinsohn’s resume is accurate.

More to come, obviously.

I have emails and texts and calls into everyone for comment, but apparently they are all out at a Mother’s Day brunch (except me).

RELATED POSTS:

• Yahoo’s Parting With Thompson Will Be for “Cause” (a.k.a. CSLie)
• Ross Levinsohn’s Yahoo Plan: Back to the Future
• Here’s New Yahoo CEO’s First Note to Troops! (The Leaking-Internal-Memos-to-ATD Policy Remains in Effect As Usual)
• Yahoo Officially Confirms ATD Report on CEO Changes and Proxy Settlement
• Meet the Man I Call “The Hair”: The Video Stylings of Yahoo’s Newest CEO Ross Levinsohn
• Will Thompson’s Ouster Mean a Yahoo-Facebook Patent Settlement Too?
• Exclusive: Yahoo’s Thompson Out; Levinsohn In; Board Settlement With Loeb Nears Completion
• Heidrick & Struggles Slaps Back at Thompson’s Yahoo in Blame Game Over ResuMess
• Is He In or Is He Out? Crunchtime for Scott Thompson at Yahoo.
• Not So Scott Free? Yahoo’s Other Big Shareholder — Cap Re — Leaning Toward Supporting Loeb Over Thompson ResuMess.
• Tech Nation’s Gunn Says She and Yahoo CEO Discussed Their CS Degrees Before 2009 Show (Video and Audio)
• Loeb Calls Again for Thompson Firing From Yahoo, as Former eBay Boss Supports Him
• Place Your Bets: Will Loeb Drop Another Bomb on Yahoo at Vegas Confab Later Today?
• Exclusive: Yahoo Director in Charge of Botched CEO Vetting to Step Down From Board
• CEO Says Sorry to Yahoos for Borked Bio “Distraction” — But Will Mea Culpa Work Without an Apology for Error? (Memo)
• Buffett Comments on Trust Issue in Yahoo CEO BioGate: “You’ve Got a Problem”
• Loeb Lobs Lawsuit, as Expected, at Yahoo’s Borked Bio Mess
• As Yahoo CEO Reaches Out to Top Staff, Board Meets to Weigh “Options” (I.E., Deciding Who Gets to Take the Borked Bio Blame)
• Yahoo Should Expect Incoming Lawsuit Lobbed by Loeb Tomorrow on CEO Hiring
• They Shoot Yahoo CEOs, Don’t They? But Not Without a Really Smoking Gun and a Much Stronger Board.
• Yahoo’s Thompson Asks Employees to “Stay Focused” — Except Not on Him
• In 2009 Interview, Yahoo CEO Does Not Deny He Has a CS Degree, and Calls Himself an “Engineer” (Audio)
• Yahoo’s Board Will “Review” Resume Discrepancy of CEO
• How Did a Phantom CS Degree Get on CEO’s Bio in SEC Filings? Yahoo’s Not Saying.
• Yahoo’s Response on CEO’s Computer Science ResumeGate: “Inadvertent Error”
• Dan Loeb Alleges “Discrepancies” on Yahoo CEO Scott Thompson’s Resume Related to Computer Science Degree

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.

RELATED POSTS:

• Yahoo’s Parting With Thompson Will Be for “Cause” (a.k.a. CSLie)
• Ross Levinsohn’s Yahoo Plan: Back to the Future
• Here’s New Yahoo CEO’s First Note to Troops! (The Leaking-Internal-Memos-to-ATD Policy Remains in Effect As Usual)
• Yahoo Officially Confirms ATD Report on CEO Changes and Proxy Settlement
• Meet the Man I Call “The Hair”: The Video Stylings of Yahoo’s Newest CEO Ross Levinsohn
• Will Thompson’s Ouster Mean a Yahoo-Facebook Patent Settlement Too?
• Exclusive: Yahoo’s Thompson Out; Levinsohn In; Board Settlement With Loeb Nears Completion
• Heidrick & Struggles Slaps Back at Thompson’s Yahoo in Blame Game Over ResuMess
• Is He In or Is He Out? Crunchtime for Scott Thompson at Yahoo.
• Not So Scott Free? Yahoo’s Other Big Shareholder — Cap Re — Leaning Toward Supporting Loeb Over Thompson ResuMess.
• Tech Nation’s Gunn Says She and Yahoo CEO Discussed Their CS Degrees Before 2009 Show (Video and Audio)
• Loeb Calls Again for Thompson Firing From Yahoo, as Former eBay Boss Supports Him
• Place Your Bets: Will Loeb Drop Another Bomb on Yahoo at Vegas Confab Later Today?
• Exclusive: Yahoo Director in Charge of Botched CEO Vetting to Step Down From Board
• CEO Says Sorry to Yahoos for Borked Bio “Distraction” — But Will Mea Culpa Work Without an Apology for Error? (Memo)
• Buffett Comments on Trust Issue in Yahoo CEO BioGate: “You’ve Got a Problem”
• Loeb Lobs Lawsuit, as Expected, at Yahoo’s Borked Bio Mess
• As Yahoo CEO Reaches Out to Top Staff, Board Meets to Weigh “Options” (I.E., Deciding Who Gets to Take the Borked Bio Blame)
• Yahoo Should Expect Incoming Lawsuit Lobbed by Loeb Tomorrow on CEO Hiring
• They Shoot Yahoo CEOs, Don’t They? But Not Without a Really Smoking Gun and a Much Stronger Board.
• Yahoo’s Thompson Asks Employees to “Stay Focused” — Except Not on Him
• In 2009 Interview, Yahoo CEO Does Not Deny He Has a CS Degree, and Calls Himself an “Engineer” (Audio)
• Yahoo’s Board Will “Review” Resume Discrepancy of CEO
• How Did a Phantom CS Degree Get on CEO’s Bio in SEC Filings? Yahoo’s Not Saying.
• Yahoo’s Response on CEO’s Computer Science ResumeGate: “Inadvertent Error”
• Dan Loeb Alleges “Discrepancies” on Yahoo CEO Scott Thompson’s Resume Related to Computer Science Degree

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.

RELATED POSTS:

• Yahoo’s Parting With Thompson Will Be for “Cause” (a.k.a. CSLie)
• Ross Levinsohn’s Yahoo Plan: Back to the Future
• Here’s New Yahoo CEO’s First Note to Troops! (The Leaking-Internal-Memos-to-ATD Policy Remains in Effect As Usual)
• Yahoo Officially Confirms ATD Report on CEO Changes and Proxy Settlement
• Meet the Man I Call “The Hair”: The Video Stylings of Yahoo’s Newest CEO Ross Levinsohn
• Will Thompson’s Ouster Mean a Yahoo-Facebook Patent Settlement Too?
• Exclusive: Yahoo’s Thompson Out; Levinsohn In; Board Settlement With Loeb Nears Completion
• Heidrick & Struggles Slaps Back at Thompson’s Yahoo in Blame Game Over ResuMess
• Is He In or Is He Out? Crunchtime for Scott Thompson at Yahoo.
• Not So Scott Free? Yahoo’s Other Big Shareholder — Cap Re — Leaning Toward Supporting Loeb Over Thompson ResuMess.
• Tech Nation’s Gunn Says She and Yahoo CEO Discussed Their CS Degrees Before 2009 Show (Video and Audio)
• Loeb Calls Again for Thompson Firing From Yahoo, as Former eBay Boss Supports Him
• Place Your Bets: Will Loeb Drop Another Bomb on Yahoo at Vegas Confab Later Today?
• Exclusive: Yahoo Director in Charge of Botched CEO Vetting to Step Down From Board
• CEO Says Sorry to Yahoos for Borked Bio “Distraction” — But Will Mea Culpa Work Without an Apology for Error? (Memo)
• Buffett Comments on Trust Issue in Yahoo CEO BioGate: “You’ve Got a Problem”
• Loeb Lobs Lawsuit, as Expected, at Yahoo’s Borked Bio Mess
• As Yahoo CEO Reaches Out to Top Staff, Board Meets to Weigh “Options” (I.E., Deciding Who Gets to Take the Borked Bio Blame)
• Yahoo Should Expect Incoming Lawsuit Lobbed by Loeb Tomorrow on CEO Hiring
• They Shoot Yahoo CEOs, Don’t They? But Not Without a Really Smoking Gun and a Much Stronger Board.
• Yahoo’s Thompson Asks Employees to “Stay Focused” — Except Not on Him
• In 2009 Interview, Yahoo CEO Does Not Deny He Has a CS Degree, and Calls Himself an “Engineer” (Audio)
• Yahoo’s Board Will “Review” Resume Discrepancy of CEO
• How Did a Phantom CS Degree Get on CEO’s Bio in SEC Filings? Yahoo’s Not Saying.
• Yahoo’s Response on CEO’s Computer Science ResumeGate: “Inadvertent Error”
• Dan Loeb Alleges “Discrepancies” on Yahoo CEO Scott Thompson’s Resume Related to Computer Science Degree

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

RELATED POSTS:

• Yahoo’s Parting With Thompson Will Be for “Cause” (a.k.a. CSLie)
• Ross Levinsohn’s Yahoo Plan: Back to the Future
• Here’s New Yahoo CEO’s First Note to Troops! (The Leaking-Internal-Memos-to-ATD Policy Remains in Effect As Usual)
• Yahoo Officially Confirms ATD Report on CEO Changes and Proxy Settlement
• Meet the Man I Call “The Hair”: The Video Stylings of Yahoo’s Newest CEO Ross Levinsohn
• Will Thompson’s Ouster Mean a Yahoo-Facebook Patent Settlement Too?
• Exclusive: Yahoo’s Thompson Out; Levinsohn In; Board Settlement With Loeb Nears Completion
• Heidrick & Struggles Slaps Back at Thompson’s Yahoo in Blame Game Over ResuMess
• Is He In or Is He Out? Crunchtime for Scott Thompson at Yahoo.
• Not So Scott Free? Yahoo’s Other Big Shareholder — Cap Re — Leaning Toward Supporting Loeb Over Thompson ResuMess.
• Tech Nation’s Gunn Says She and Yahoo CEO Discussed Their CS Degrees Before 2009 Show (Video and Audio)
• Loeb Calls Again for Thompson Firing From Yahoo, as Former eBay Boss Supports Him
• Place Your Bets: Will Loeb Drop Another Bomb on Yahoo at Vegas Confab Later Today?
• Exclusive: Yahoo Director in Charge of Botched CEO Vetting to Step Down From Board
• CEO Says Sorry to Yahoos for Borked Bio “Distraction” — But Will Mea Culpa Work Without an Apology for Error? (Memo)
• Buffett Comments on Trust Issue in Yahoo CEO BioGate: “You’ve Got a Problem”
• Loeb Lobs Lawsuit, as Expected, at Yahoo’s Borked Bio Mess
• As Yahoo CEO Reaches Out to Top Staff, Board Meets to Weigh “Options” (I.E., Deciding Who Gets to Take the Borked Bio Blame)
• Yahoo Should Expect Incoming Lawsuit Lobbed by Loeb Tomorrow on CEO Hiring
• They Shoot Yahoo CEOs, Don’t They? But Not Without a Really Smoking Gun and a Much Stronger Board.
• Yahoo’s Thompson Asks Employees to “Stay Focused” — Except Not on Him
• In 2009 Interview, Yahoo CEO Does Not Deny He Has a CS Degree, and Calls Himself an “Engineer” (Audio)
• Yahoo’s Board Will “Review” Resume Discrepancy of CEO
• How Did a Phantom CS Degree Get on CEO’s Bio in SEC Filings? Yahoo’s Not Saying.
• Yahoo’s Response on CEO’s Computer Science ResumeGate: “Inadvertent Error”
• Dan Loeb Alleges “Discrepancies” on Yahoo CEO Scott Thompson’s Resume Related to Computer Science Degree

Daniel Loeb of Third Point — the activist shareholder who set off a management crisis at Yahoo last week with the revelation that new CEO Scott Thompson had added a fake computer science degree to his bio — will be onstage at a high-profile investor confab in Las Vegas this afternoon.

It’s Loeb’s first public appearance since he scored a direct hit on Yahoo in his ongoing proxy fight against the company — a first casualty yesterday, with the stepping-down of Yahoo director Patti Hart, who was charged with vetting Thompson for the job.

With one win like that, can Loeb resist using the panel — titled “Titans of Wall Street: Insight & Strategies for Capitalizing on Today’s Markets” — to strafe Yahoo a bit?

Sources said Loeb is prepping some reaction to Thompson’s apology on Monday for the borked bio becoming a “distraction” (but not, oddly, for the mistake itself), as well as an offer to work with the Yahoo board on a new CEO choice. Loeb has called for Thompson’s firing over the bio fibbing.

But the pugnacious investor will likely also be asked to opine on the situation so far at the off-the-record SkyBridge Alternatives Conference, which describes itself as “committed to facilitating balanced discussions and debates on macro-economic trends, geo-political events and alternative investment opportunities within the context of a dynamic global economy.”

What will be more interesting to see in the days ahead — even as the Yahoo board investigates how the false information about Thompson’s academic credentials got on that bio, as well as in regulatory filings — is if Loeb can be more than just a bomb-thrower and put forth a more specific and substantive plan for the long-troubled company than he has so far.

It’s not a requirement, of course, since Loeb is only seeking board seats and is not lobbying to be CEO, whose job it is to formulate a cogent strategy. But other Yahoo shareholders he is seeking to convince to join him in his proxy battle probably want more than “Yahoo stinks” from him at some point.

Still, for today at about 1:35 pm PT, when Loeb is scheduled to speak, it’s probably a good bet to expect some less-than-pretty noise from Sin City.

Update: In related news, eBay CEO John Donahoe, Thompson’s former boss, lent words of support but also underscored that the commerce company’s legal filings of his bio were always correct, even if its Web site was 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.

RELATED POSTS:

• Yahoo’s Parting With Thompson Will Be for “Cause” (a.k.a. CSLie)
• Ross Levinsohn’s Yahoo Plan: Back to the Future
• Here’s New Yahoo CEO’s First Note to Troops! (The Leaking-Internal-Memos-to-ATD Policy Remains in Effect As Usual)
• Yahoo Officially Confirms ATD Report on CEO Changes and Proxy Settlement
• Meet the Man I Call “The Hair”: The Video Stylings of Yahoo’s Newest CEO Ross Levinsohn
• Will Thompson’s Ouster Mean a Yahoo-Facebook Patent Settlement Too?
• Exclusive: Yahoo’s Thompson Out; Levinsohn In; Board Settlement With Loeb Nears Completion
• Heidrick & Struggles Slaps Back at Thompson’s Yahoo in Blame Game Over ResuMess
• Is He In or Is He Out? Crunchtime for Scott Thompson at Yahoo.
• Not So Scott Free? Yahoo’s Other Big Shareholder — Cap Re — Leaning Toward Supporting Loeb Over Thompson ResuMess.
• Tech Nation’s Gunn Says She and Yahoo CEO Discussed Their CS Degrees Before 2009 Show (Video and Audio)
• Loeb Calls Again for Thompson Firing From Yahoo, as Former eBay Boss Supports Him
• Place Your Bets: Will Loeb Drop Another Bomb on Yahoo at Vegas Confab Later Today?
• Exclusive: Yahoo Director in Charge of Botched CEO Vetting to Step Down From Board
• CEO Says Sorry to Yahoos for Borked Bio “Distraction” — But Will Mea Culpa Work Without an Apology for Error? (Memo)
• Buffett Comments on Trust Issue in Yahoo CEO BioGate: “You’ve Got a Problem”
• Loeb Lobs Lawsuit, as Expected, at Yahoo’s Borked Bio Mess
• As Yahoo CEO Reaches Out to Top Staff, Board Meets to Weigh “Options” (I.E., Deciding Who Gets to Take the Borked Bio Blame)
• Yahoo Should Expect Incoming Lawsuit Lobbed by Loeb Tomorrow on CEO Hiring
• They Shoot Yahoo CEOs, Don’t They? But Not Without a Really Smoking Gun and a Much Stronger Board.
• Yahoo’s Thompson Asks Employees to “Stay Focused” — Except Not on Him
• In 2009 Interview, Yahoo CEO Does Not Deny He Has a CS Degree, and Calls Himself an “Engineer” (Audio)
• Yahoo’s Board Will “Review” Resume Discrepancy of CEO
• How Did a Phantom CS Degree Get on CEO’s Bio in SEC Filings? Yahoo’s Not Saying.
• Yahoo’s Response on CEO’s Computer Science ResumeGate: “Inadvertent Error”
• Dan Loeb Alleges “Discrepancies” on Yahoo CEO Scott Thompson’s Resume Related to Computer Science Degree

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:

RELATED POSTS:

• Yahoo’s Parting With Thompson Will Be for “Cause” (a.k.a. CSLie)
• Ross Levinsohn’s Yahoo Plan: Back to the Future
• Here’s New Yahoo CEO’s First Note to Troops! (The Leaking-Internal-Memos-to-ATD Policy Remains in Effect As Usual)
• Yahoo Officially Confirms ATD Report on CEO Changes and Proxy Settlement
• Meet the Man I Call “The Hair”: The Video Stylings of Yahoo’s Newest CEO Ross Levinsohn
• Will Thompson’s Ouster Mean a Yahoo-Facebook Patent Settlement Too?
• Exclusive: Yahoo’s Thompson Out; Levinsohn In; Board Settlement With Loeb Nears Completion
• Heidrick & Struggles Slaps Back at Thompson’s Yahoo in Blame Game Over ResuMess
• Is He In or Is He Out? Crunchtime for Scott Thompson at Yahoo.
• Not So Scott Free? Yahoo’s Other Big Shareholder — Cap Re — Leaning Toward Supporting Loeb Over Thompson ResuMess.
• Tech Nation’s Gunn Says She and Yahoo CEO Discussed Their CS Degrees Before 2009 Show (Video and Audio)
• Loeb Calls Again for Thompson Firing From Yahoo, as Former eBay Boss Supports Him
• Place Your Bets: Will Loeb Drop Another Bomb on Yahoo at Vegas Confab Later Today?
• Exclusive: Yahoo Director in Charge of Botched CEO Vetting to Step Down From Board
• CEO Says Sorry to Yahoos for Borked Bio “Distraction” — But Will Mea Culpa Work Without an Apology for Error? (Memo)
• Buffett Comments on Trust Issue in Yahoo CEO BioGate: “You’ve Got a Problem”
• Loeb Lobs Lawsuit, as Expected, at Yahoo’s Borked Bio Mess
• As Yahoo CEO Reaches Out to Top Staff, Board Meets to Weigh “Options” (I.E., Deciding Who Gets to Take the Borked Bio Blame)
• Yahoo Should Expect Incoming Lawsuit Lobbed by Loeb Tomorrow on CEO Hiring
• They Shoot Yahoo CEOs, Don’t They? But Not Without a Really Smoking Gun and a Much Stronger Board.
• Yahoo’s Thompson Asks Employees to “Stay Focused” — Except Not on Him
• In 2009 Interview, Yahoo CEO Does Not Deny He Has a CS Degree, and Calls Himself an “Engineer” (Audio)
• Yahoo’s Board Will “Review” Resume Discrepancy of CEO
• How Did a Phantom CS Degree Get on CEO’s Bio in SEC Filings? Yahoo’s Not Saying.
• Yahoo’s Response on CEO’s Computer Science ResumeGate: “Inadvertent Error”
• Dan Loeb Alleges “Discrepancies” on Yahoo CEO Scott Thompson’s Resume Related to Computer Science Degree

]]> http://allthingsd.com/20120508/exclusive-yahoo-director-in-charge-of-botched-ceo-vetting-to-step-down-from-board/feed/ 0 http://allthingsd.com/20120507/buffett-comments-on-yahoo-ceo-biogate-calling-trust-issue-a-problem/ http://allthingsd.com/20120507/buffett-comments-on-yahoo-ceo-biogate-calling-trust-issue-a-problem/#comments Mon, 07 May 2012 16:44:06 +0000 Kara Swisher http://allthingsd.com/?p=204521

Activist shareholder Daniel Loeb of Third Point just got an unlikely and powerful ally in his proxy fight against Yahoo: Berkshire Hathaway’s famed Warren Buffett.

In a wide-ranging interview on CNBC this morning, when asked about the controversy, Buffett said about the Silicon Valley Internet giant’s excuse that the addition of a false computer science degree to Yahoo CEO Scott Thompson’s bio was an “inadvertent error”:

“It doesn’t sound like an inadvertent error … If I thought as a director, if I thought that an officer had consistently misstated some fact to me, I think I’d probably do something about it,” said the legendary investor, in part, who also noted he did not know all the facts.

Still, said Buffett: “If you can’t trust the people you’re working with, you’ve got a problem.”

Ziiiiing, because if the sage of Omaha thinks it’s bad, it has moved to worse.

And, indeed it has — earlier today, Loeb lobbed a legal demand for information about Thompson’s hiring and more.

Yahoo’s board is conducting an investigation into the matter, led by independent director Fred Amoroso.

RELATED POSTS:

• Yahoo’s Parting With Thompson Will Be for “Cause” (a.k.a. CSLie)
• Ross Levinsohn’s Yahoo Plan: Back to the Future
• Here’s New Yahoo CEO’s First Note to Troops! (The Leaking-Internal-Memos-to-ATD Policy Remains in Effect As Usual)
• Yahoo Officially Confirms ATD Report on CEO Changes and Proxy Settlement
• Meet the Man I Call “The Hair”: The Video Stylings of Yahoo’s Newest CEO Ross Levinsohn
• Will Thompson’s Ouster Mean a Yahoo-Facebook Patent Settlement Too?
• Exclusive: Yahoo’s Thompson Out; Levinsohn In; Board Settlement With Loeb Nears Completion
• Heidrick & Struggles Slaps Back at Thompson’s Yahoo in Blame Game Over ResuMess
• Is He In or Is He Out? Crunchtime for Scott Thompson at Yahoo.
• Not So Scott Free? Yahoo’s Other Big Shareholder — Cap Re — Leaning Toward Supporting Loeb Over Thompson ResuMess.
• Tech Nation’s Gunn Says She and Yahoo CEO Discussed Their CS Degrees Before 2009 Show (Video and Audio)
• Loeb Calls Again for Thompson Firing From Yahoo, as Former eBay Boss Supports Him
• Place Your Bets: Will Loeb Drop Another Bomb on Yahoo at Vegas Confab Later Today?
• Exclusive: Yahoo Director in Charge of Botched CEO Vetting to Step Down From Board
• CEO Says Sorry to Yahoos for Borked Bio “Distraction” — But Will Mea Culpa Work Without an Apology for Error? (Memo)
• Buffett Comments on Trust Issue in Yahoo CEO BioGate: “You’ve Got a Problem”
• Loeb Lobs Lawsuit, as Expected, at Yahoo’s Borked Bio Mess
• As Yahoo CEO Reaches Out to Top Staff, Board Meets to Weigh “Options” (I.E., Deciding Who Gets to Take the Borked Bio Blame)
• Yahoo Should Expect Incoming Lawsuit Lobbed by Loeb Tomorrow on CEO Hiring
• They Shoot Yahoo CEOs, Don’t They? But Not Without a Really Smoking Gun and a Much Stronger Board.
• Yahoo’s Thompson Asks Employees to “Stay Focused” — Except Not on Him
• In 2009 Interview, Yahoo CEO Does Not Deny He Has a CS Degree, and Calls Himself an “Engineer” (Audio)
• Yahoo’s Board Will “Review” Resume Discrepancy of CEO
• How Did a Phantom CS Degree Get on CEO’s Bio in SEC Filings? Yahoo’s Not Saying.
• Yahoo’s Response on CEO’s Computer Science ResumeGate: “Inadvertent Error”
• Dan Loeb Alleges “Discrepancies” on Yahoo CEO Scott Thompson’s Resume Related to Computer Science Degree

]]> http://allthingsd.com/20120507/buffett-comments-on-yahoo-ceo-biogate-calling-trust-issue-a-problem/feed/ 0 http://allthingsd.com/20120507/loeb-lobs-lawsuit-as-expected-at-yahoos-borked-bio-mess/ http://allthingsd.com/20120507/loeb-lobs-lawsuit-as-expected-at-yahoos-borked-bio-mess/#comments Mon, 07 May 2012 16:23:59 +0000 Kara Swisher http://allthingsd.com/?p=204506

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

RELATED POSTS:

• Yahoo’s Parting With Thompson Will Be for “Cause” (a.k.a. CSLie)
• Ross Levinsohn’s Yahoo Plan: Back to the Future
• Here’s New Yahoo CEO’s First Note to Troops! (The Leaking-Internal-Memos-to-ATD Policy Remains in Effect As Usual)
• Yahoo Officially Confirms ATD Report on CEO Changes and Proxy Settlement
• Meet the Man I Call “The Hair”: The Video Stylings of Yahoo’s Newest CEO Ross Levinsohn
• Will Thompson’s Ouster Mean a Yahoo-Facebook Patent Settlement Too?
• Exclusive: Yahoo’s Thompson Out; Levinsohn In; Board Settlement With Loeb Nears Completion
• Heidrick & Struggles Slaps Back at Thompson’s Yahoo in Blame Game Over ResuMess
• Is He In or Is He Out? Crunchtime for Scott Thompson at Yahoo.
• Not So Scott Free? Yahoo’s Other Big Shareholder — Cap Re — Leaning Toward Supporting Loeb Over Thompson ResuMess.
• Tech Nation’s Gunn Says She and Yahoo CEO Discussed Their CS Degrees Before 2009 Show (Video and Audio)
• Loeb Calls Again for Thompson Firing From Yahoo, as Former eBay Boss Supports Him
• Place Your Bets: Will Loeb Drop Another Bomb on Yahoo at Vegas Confab Later Today?
• Exclusive: Yahoo Director in Charge of Botched CEO Vetting to Step Down From Board
• CEO Says Sorry to Yahoos for Borked Bio “Distraction” — But Will Mea Culpa Work Without an Apology for Error? (Memo)
• Buffett Comments on Trust Issue in Yahoo CEO BioGate: “You’ve Got a Problem”
• Loeb Lobs Lawsuit, as Expected, at Yahoo’s Borked Bio Mess
• As Yahoo CEO Reaches Out to Top Staff, Board Meets to Weigh “Options” (I.E., Deciding Who Gets to Take the Borked Bio Blame)
• Yahoo Should Expect Incoming Lawsuit Lobbed by Loeb Tomorrow on CEO Hiring
• They Shoot Yahoo CEOs, Don’t They? But Not Without a Really Smoking Gun and a Much Stronger Board.
• Yahoo’s Thompson Asks Employees to “Stay Focused” — Except Not on Him
• In 2009 Interview, Yahoo CEO Does Not Deny He Has a CS Degree, and Calls Himself an “Engineer” (Audio)
• Yahoo’s Board Will “Review” Resume Discrepancy of CEO
• How Did a Phantom CS Degree Get on CEO’s Bio in SEC Filings? Yahoo’s Not Saying.
• Yahoo’s Response on CEO’s Computer Science ResumeGate: “Inadvertent Error”
• Dan Loeb Alleges “Discrepancies” on Yahoo CEO Scott Thompson’s Resume Related to Computer Science Degree

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