Yahoo has formed a special committee to conduct a thorough review of CEO Scott Thompson and his academic credentials after it was revealed that he made false claims about his education on his CV.
The special committee, which is chaired by Alfred Amoroso, an independent director who joined the Yahoo board in February 2012, will also review the facts and circumstances related to the hiring of Thompson as CEO in January, the company announced.
Thompson apologised to Yahoo employees worldwide in an email on 7 May, but damage had already been done as one day later Patti Hart, the board member who headed the hiring of Thompson, stepped down according to All Things D.
It is claimed that Hart - who is a Yahoo board member, but also CEO of International Game Technology, which produces electronic gaming equipment - was asked by her own company to remove herself from the Yahoo scandal and not stand for re-election.
A biography of Thompson published on the Yahoo website and in papers filed with the US Securities and Exchange Commission claimed the CEO had majored in accounting and computer science at Stonehill College, but Yahoo has now acknowledged that he majored in accounting only.
The factual error in Thompson's biography was first published on 3 May in a public letter by activist shareholder Daniel Loeb, who leads the Third Point investment fund; Yahoo first acknowledged the issue, then announced that it would be looked into.
In his apology to Yahoo staff, Thompson said: "I want you to know how deeply I regret how this issue has affected the company and all of you. We have all been working very hard to move the company forward and this has had the opposite effect. For that, I take full responsibility, and I want to apologize to you."
Loeb had previously revealed inaccuracies in Patti Hart's CV, where she had incorrectly stated having a bachelor's degree in marketing and economics, when her degree was really a B.S. in business administration with specialities in marketing and economics.
While still reaching more than 600 million internet users per month, Yahoo has - like that other dinosaur of Web 1.0, AOL - been left behind by Google in search and by Facebook and Twitter in social networking.
The web giant has struggled with stability in recent months after Thompson's predecessor Carol Bartz was ousted by the board and later dismissed them as "doofuses".
Getting rid of Bartz may have been a good move, however, as during her two-and-a-half years as chief executive the number of minutes spent on Yahoo by US users fell by 33 percent, according to comScore.
Soon after Thompson was appointed CEO, Yahoo co-founder Jerry Yang stepped down from the board, saying: "The time has come for me to pursue other interests outside of Yahoo." No details were given, but it seems that Yang saw his once-great company had been caught napping by younger, more agile firms of the Web 2.0 generation, and thought it best to more on.
The uncertainty over Thompson's future comes at a bad time for Yahoo, as it faces criticism from investors unhappy with the company's apparent inability to make a turnaround, and its slow handling of investments in Alibaba, China's largest e-commerce company.
Yahoo is in the process of selling its 40 percent stake in Alibaba group, an asset viewed by investors to be Yahoo's most valuable.