When Yahoo ignored Third Point’s ultimatum to fire CEO Scott Thompson for cause by high noon Monday Third Point read Yahoo Delaware General Corporation Law and demanded that the company open all its records about how it came to hire the man at the center of “ResumeGate.”
It wants them ready for inspection and copying by Friday, another deadline.
Section 220(b) of the Delaware General Corporation Law says any stockholder can inspect certain books and records of a public company on written request. If Third Point doesn’t get what it wants it will doubtless sue in Delaware’s reportedly stockholder-leaning Chancery Court.
Meanwhile, the Yahoo board is supposed to be doing its own investigation of how it came to make a regulatory filing saying Thompson got an undergraduate degree in computer science and accounting from Stonehill College, a Catholic school near Boston, when it was only in accounting.
Yahoo claimed last week that it was just an “inadvertent error,” but it appears that Thompson has been making that “inadvertent error” for years like at eBay where he was president of PayPal.
In a letter to the board Monday Third Point said, “We believe that this internal investigation by this Board must not be conducted behind a veil of secrecy and shareholders deserve total transparency.”
Third Point is Yahoo’s biggest shareholder and is embroiled in a proxy fight with the company aimed at filling four board seats with its own people.
The hedge fund happened upon and immediately advertised the discrepancy in Thompson’s CV last week.
It also discovered that the head of the board’s search committee Patti Hart fudged her resume too and claimed to have a bachelor’s degree in marketing and economics when it’s really in business administration. It wants her gone too.
Third Point wants any records related to her appointment to the Yahoo board as well as any records of how Peter Liguori, John Hayes, Thomas McInerney, Maynard Webb, Jr. and Fred Amoroso happened to get board seats.
If it gets its hands on the documents, Forbes thinks Third Point is going to find that Thompson wasn’t vetted at all; that no head hunter was involved; that there were no other candidates; and that Thompson simply reached out to the board and two weeks later was CEO. If so it will strengthen Third Point’s case of board mismanagement, an easy enough case to prove given Yahoo’s history.
It wants the board to drop its resistance to Third Point’s nominees for the board which include Third Point CEO Daniel Loeb, Maeva Group CEO Harry Wilson, former MTV Networks president Michael Wolf and former NBC Universal CEO Jeff Zucker. Yahoo claims Loeb isn’t qualified to sit on the board.
Meanwhile, and utterly coincidently, Yahoo is supposedly working on a new deal to sell maybe 15%-25% of its holdings in Alibaba back to the China e-commerce company. A deal, which has previously eluded the two companies, could reportedly be done in weeks.
Thompson has supposedly been leading the latest negotiations.
This deal is supposed to be simpler than the others they tried and would see Yahoo pay heavy taxes on its gains. Of course selling an increasingly valuable asset that’s supposed to represent a large part of Yahoo’s $18.8 billion market cap may not strike everybody as the sensible thing to do right now no matter how much Alibaba complains.
Yahoo owns about 40% of Alibaba and the valuation is unclear. Its valuation last year was $32 billion. Yahoo hasn’t been able to bridge a “valuation gap” with Softbank, the majority owner of Yahoo Japan, so that deal’s going nowhere.