Published May 08, 2012
Yahoo Inc director Patti Hart will not seek re-election to Yahoo's board, according to a source familiar with the matter, as the Internet company's board moved forward with an investigation of its new chief executive's educational background.
Yahoo's board said on Tuesday that is has appointed a special committee and hired a law firm to review CEO Scott Thompson's educational credentials as well as the "facts and circumstances related to the review and disclosure of those credentials in connection with Thompson's appointment as CEO."
The committee, and the news that Hart will leave the board, mark the most significant developments since a controversy erupted about Thompson's background last week.
On Thursday, activist hedge fund Third Point, which is waging a proxy battle against Yahoo, revealed that Thompson did not have a college degree in computer science as was stated in his official company biography and in Yahoo regulatory filings with the U.S. Securities and Exchange Commission.
Yahoo has acknowledged that Thompson does not have a computer science degree, initially calling the discrepancy an "inadvertent error." Yahoo later said its board of directors will investigate the matter.
Hart led the search committee that hired Scott Thompson, the president of PayPal, to take the CEO reins at Yahoo in January.
A Yahoo board member since June 2010, Hart is the chief executive of electronic game products company International Game Technology.
According to the person familiar with the matter, Hart's exit from Yahoo's board is being driven by pressure from the board of International Game Technology, "which doesn't want her to be distracted."
Yahoo and International Game Technology were not immediately available for comment.
On Tuesday, Yahoo said that Alfred Amoroso, an independent director who joined Yahoo in February, would lead a three-person committee to review the matter.
Citing the "urgency" of the situation, Yahoo's board said the committee will conduct the review in an "independent, thorough and expeditious manner" and will make appropriate disclosures to shareholders when the review is completed.
The board said the committee had retained the Los Angeles law firm of Bird, Marella, Boxer, Wolpert, Nessim, Drooks and Licenberg.
The controversy marks the latest setback for Yahoo, which is trying to revive its revenue growth and is facing a bitter proxy fight with Third Point, its largest outside shareholder.
Third Point has called for Yahoo to turn over all records related to Thompson's hiring.
Hart also was accused by Third Point of embellishing her educational record. Third Point alleged last week that she has a degree in business administration, rather than in marketing and economics, as was stated in regulatory filings.
Yahoo confirmed that Hart has a bachelor of science degree in business administration with "specialties" in marketing and economics from Illinois State University.
Hart's exit would mark the latest change to Yahoo's board, amid long-running investor discontent with the company's performance and management.
In February, Yahoo said that Chairman Roy Bostock and three other directors would step down. One month before that, Yahoo co-founder Jerry Yang resigned from the board.
Hart's plans not to seek re-election were first reported by the technology blog AllThingsD.com, which cited unnamed sources.
Shares of Yahoo were up one penny at $15.37 on Tuesday.