Yahoo is a mess. It’s not just that the company got outflanked by Google. It’s not just that it struggled to find a place in an evolving Internet economy. Yahoo is run by a collection of absentee landlords, otherwise known as its board of directors. It’s time the directors fell on their swords and resigned.
Exhibit A: Scott Thompson. Four months ago, the board hired Thompson as Yahoo’s new CEO. But Thompson fudged the facts about his education. On May 3, billionaire shareholder Dan Loeb discovered that Thompson had claimed he received a degree in computer science from Stonehill College in Massachusetts, a claim that was repeated in Yahoo’s filings with the Securities and Exchange Commission. In fact, he only received a degree in accounting. Stonehill College didn’t even offer a computer science degree at the time.
After Loeb uncovered this lie, Thompson first tried to blame his executive search firm, claiming it had cooked up an extra degree for him. When the truth was exposed last week, he resigned in disgrace.
Thompson is hardly the sort of character to run a company as important as Yahoo. That’s why the board of directors is supposed to vet candidates for such a critical position.
Exhibit B: Carol Bartz. Bartz was hired as CEO in 2009, when Yahoo’s stock was plummeting and its future role in the Internet world was unclear. Bartz focused on Yahoo’s strength as a content portal, ceding the search business to Google.
It was the only available option, but as Bartz declared when she took the job, rebuilding the company would take time. In the 2½ years Bartz ran the place, Yahoo expanded its profit margins. But that wasn’t enough for the board, and board Chairman Roy Bostock fired her in September.
Bartz claimed that Bostock waited until she was on the East Coast, then called her cellphone and read a statement prepared by a lawyer. “Why don’t you have the balls to tell me yourself?” Bartz claims she replied. “I thought you were classier.”
Exhibit C: Jerry Yang. Yang founded Yahoo and made the company what it was, but by 2008, Google had outclassed Yahoo in the search business. Microsoft offered to buy the company for an astonishing $44.6 billion, or $31 a share. The deal would have saved the company and netted investors a fortune. But as CEO, Yang scuttled the deal, holding out for more, even as he knew Yahoo wasn’t worth nearly that much. Today, Yahoo is trading at $15 a share, less than half what Microsoft offered. The board of directors watched this debacle and did nothing.
After what he did, Thompson should be waiting in an unemployment line. Instead, he can retire comfortably, thanks to the board’s resignation package of $6.5 million in cash and stock.
Yahoo is a major Internet portal and publicly traded company, and the board is running it like a lemonade stand. It’s time for them to make way for people who will take such an enterprise seriously.