Yahoo’s Hart Plans to Exit Board Amid CEO Resume Review
Yahoo (YHOO)! Inc. director Patti Hart plans to leave the board of the biggest U.S. Web portal amid questions about her role in hiring Chief Executive Officer Scott Thompson, whose academic credentials were misstated by the company.
Hart said she won’t seek re-election to the board, citing her duties as CEO of International Game Technology. She was asked by that company’s board to step back from Yahoo because that job could become a distraction, according to a statement yesterday from Hart and Chairman Philip Satre. Hart was on the Yahoo committee responsible for hiring Thompson, whose biography falsely said he held a degree in computer science.
“My primary responsibilities are to serve as chief executive officer of IGT and to eliminate activities that may interfere with my ability to carry out my commitments to IGT and its valued stakeholders.” Hart said in the statement.
Yahoo investor Third Point LLC has stepped up pressure for Thompson’s ouster after disclosing the discrepancy in his credentials last week, prompting the board to embark on a review of the matter. The fallout marks a setback for Thompson, who joined from EBay Inc. (EBAY) in January and is attempting to revive Yahoo’s growth. He replaced Carol Bartz, who was dismissed in September amid falling sales and market-share losses to Google Inc. and Facebook Inc.
“This was a flawed process,” said Colin Gillis, an analyst at BGC Partners in New York who has a hold rating on the stock and doesn’t own it. “What’s happening is that Third Point’s case -- that the board is not functioning effectively -- has been strengthened.”
Sunnyvale, California-based Yahoo also said yesterday it formed a committee of three recently appointed independent board members to review Thompson’s academic credentials and the vetting process that preceded his selection as CEO.
In a statement confirming Hart’s planned exit as a director, the Yahoo board said, “we thank Patti for her years of service and wish her all the best.”
The review committee’s chairman is Alfred Amoroso, who joined in February. The other directors on the panel are John Hayes and Thomas McInerney, who both joined in April. The committee has also retained Terry Bird as independent counsel.
Third Point is trying to win seats on Yahoo’s board and has said the company is mismanaged.
The biography for Thompson listed a bachelor’s degree in computer science from Stonehill College in Easton, Massachusetts, a credential that wasn’t offered until four years after he graduated, Third Point CEO Daniel Loeb said last week.
Yahoo’s board said last week that it would review the matter and “make an appropriate disclosure to shareholders.” The company had earlier called the discrepancy an “inadvertent error” and said it “in no way alters that fact that Mr. Thompson is a highly qualified executive with a successful track record leading large consumer technology companies.”
Loeb also said Hart inflated her degree. Hart is listed in filings as holding a “bachelor’s degree in marketing and economics” from Illinois State University, Loeb said last week. “However, we understand that Ms. Hart’s degree is in business administration. She received a degree in neither marketing nor economics.”
Yahoo said in its response at the time that “Patti Hart holds a bachelor of science degree in business administration with specialties in marketing and economics from Illinois State University.”
Jay Groves, a spokesman for Illinois State, last week corroborated the business administration degree, saying Hart graduated in 1978 with a concentration in economics and marketing.
In the statement yesterday, International Game Technology (IGT) Chairman Satre said that after a review, the company’s directors found “no material inconsistencies” in Hart’s academic credentials.
“We will closely monitor future developments at Yahoo and their impact on Patti’s responsibilities to IGT,” Satre said.