Inside the Yahoo board’s decision making process over Thompson affair

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An article of the New York Times has revealed how the board of Yahoo came to a decision over its former-CEO Scott Thompson, who lied about having a computer science degree – which then started a proxy fight.

The board gave Thompson a chance to explain himself, and implicitly suggested he “should publicly admit it, apologize and offer to resign” – that way, the Board might have stood behind him.

Thompson, however, “said nothing more to clear up the matter” other than “fumed at [Daniel Loeb, the investor who revealed that Thompson lied about his degrees]”.

The revelations shook Yahoo, with board members getting calls from some employees and managers – all of them saying that lying about having a computer science degree is not a minor discrepancy in Silicon Valley. One employee said:

“It was a very emotional situation for employees,” one person involved said. “They were saying, ‘How can I work for a company that has a C.E.O. who claims to be a computer scientist when he’s not? I can’t work here if that’s true.’ “

Thompson appeared to salvage the situation by garnering up support within board members and executives, but also not offering more information about why he lied. According to the article:

Mr. Thompson began seeking pledges of support from some board members and executives without offering any further information, which bothered some board members. When a top manager, one of the people directly reporting to Mr. Thompson, said he couldn’t provide such support, Mr. Thompson told him not to reveal their conversation (the employee did tell co-workers, some of whom reported it to the board.) “Scott was trying to rustle up support, and when he didn’t get it, he tried to silence people,” a board member said. “This went straight to the trust issue.”

The final straw, according to the article, was when Thompson blamed the entire fiasco on the recruitment firm Heidrick & Struggles – who promptly issues a statement saying that it was not true. A Yahoo board member told the NYT, “We never got this confirmed but I presumed he had given them a statement or resume that contained the false degree.”

It was at that time, the board met and all decided that Thompson had to go. However, three hours in, Thompson called his closest friend Brad Smith, CEO of Intuit and a board member on Yahoo, and told him that he was going to “part ways” with the company after he said that he has tyroid cancer. The board, while inclining to terminate him ‘for cause’ – meaning no severance and no stock options – they also didn’t want to be too harsh after revealing his medical condition.

You can read the entire article from The New York Times here.

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