As promised, Daniel Loeb and his firm, Third Point LLC, have today sent a letter to Yahoo! Inc. (NASDAQ: YHOO) demanding that the Internet firm open its books and records related to the hiring of CEO Scott Thompson, formerly head of payment services at Ebay Inc. (NASDAQ: EBAY).
Loeb and Third Point are demanding the material for the following reasons:
- To investigate wrongdoing or possible mismanagement by Yahoo!’s management and/or any member(s) or committee(s) of its Board of Directors (the “Board”) in connection with the hiring of Scott Thompson as the Chief Executive Officer of the Company and his appointment to the Board;
- To investigate wrongdoing or possible mismanagement by Yahoo!’s management and/or any member(s) or committee(s) of its Board in connection with the appointment of Peter Liguori, John Hayes, Thomas McInerney, Maynard Webb, Jr. and Fred Amoroso to the Yahoo! board rather than the nominees proposed by Third Point;
- To investigate wrongdoing or possible mismanagement by Yahoo!’s management and/or any member(s) or committee(s) of its Board in connection with the statements by Yahoo! on the afternoon of May 3 that the false filings about Mr. Thompson’s educational background were “inadvertent.”
- To determine whether Scott Thompson, Patti Hart, Peter Liguori, John Hayes, Maynard Webb, Jr., Fred Amoroso, and Thomas McInerney are suitable to serve as directors of Yahoo!;
- To facilitate communications with other stockholders concerning the matters identified in paragraphs 1 through 4 above, in connection with a proxy contest to replace the current board of directors with nominees proposed by Third Point.
That Thompson does not have the degree he claims to have from Stonehill College has been established. What Loeb is using as leverage here is that in a federal filing of the announcement of Thompson’s hiring Yahoo included Thompson’s misstatement (lie?) about his academic history. Telling the federal government something that is not true on an official filing is a big deal, and Loeb has chosen to jump on it.
The filing also calls into question the competence of Yahoo’s board, which should have checked Thompson’s claims on his résumé. Third Point’s letter cites several academics all of whom suggest that Thompson should be replaced if he did in fact lie on his résumé. Warren Buffett has also weighed in, saying that “it doesn’t sound like an inadvertent error” to him.
The letter from Third Point lists 15 categories of documents that the firm wants Yahoo to provide. Yahoo has not yet responded to Third Point’s letter.
The letter from Third Point is available here.