As you may recall, Yahoo and CEO Scott Thompson have agreed to part ways as of yesterday. Thompson, who found himself locked in a battle with activist Yahoo investor Dan Loeb and his venture capital firm Third Point, was accused of providing false credentials in his company biography and other official documents. Doing his best to sidestep the issue, Thompson urged the Yahoo staff to get on with business as usual, but a formal investigation was already underway.
With pressure for Yahoo to react, and pressure on Thompson to respond to the allegations, the CEO announced his formal plans to resign late on Sunday. According to Thompson, he was recently diagnosed with thyroid cancer, and is leaving in order to focus on getting treatment, but doesn’t wish to disclose any further details about his personal health issues. His resignation represents a win for Third Point in the proxy battle against the Yahoo board.
With Thompson leaving for medical issues we were left wondering if Yahoo would pay him his severance from his employment offer in light of the recent false credentials scandal, but today we have a definitive answer. Yahoo is claiming they have a “cause” for his departure, which frees them from their obligation under the employment offer Thompson originally signed. Essentially, the false credentials debacle cost Thomson his severance.
Before you go feeling too bad for Thompson listen to what he does get to keep. Yahoo has agreed to award him his “Make-Whole” cash bonus and his restricted stock options, both of which sum to about $7 million. In return, he has signed an agreement to not disparage Yahoo or Yahoo disparage him in any future claims. Basically, they agree the separation is mutually beneficial.
Here’s a segment from the agreement between Thompson and Yahoo:
” The parties reiterated their obligations with regard to disparagement under Mr. Thompson’s offer letter, providing that Mr. Thompson not knowingly disparage Yahoo! or its officers, directors, employees or agents in any manner likely to be harmful to their respective business, business reputation or personal reputation, and that Yahoo! instruct its Chairman, certain employees and executive officers not to knowingly disparage Mr. Thompson in any manner likely to be harmful to his business, business reputation or personal reputation other than in the good-faith performance of their duties to Yahoo! or in connection with their fiduciary duties to Yahoo! and applicable law.”
Ross Levinsohn will stand as the interim CEO and Fred Amoroso will hold the position of Chairman on the Yahoo Board of Directors. Daniel S. Loeb, Harry J. Wilson, and Michael J. Wolf of Third Point have also been added to the board. This marks the beginning of a new era for Yahoo and hopefully a more stable year. So far for 2012 we have seen thousands of lay offs, a loss of a CEO, and multiple resignations on the board of directors. It has to get better than this.