Yahoo Former CEO Scott Thompson Compensation Agreement

Less than six months after he joined Yahoo! on January 9, 2012, Scott Thompson has resigned as Yahoo!’s President and CEO. His resignation came 10 days after it was discovered by activist hedge fund Third Point LLC that his resume had been inflated with a fictional computer science degree. It is still unclear how this educational embellishment came to appear on Scott Thomson’s official biography, which was filed by Yahoo! with the Securities and Exchange Commission as well as its own website.

Following the claim of inaccuracies on Mr. Thompson’s biography by dissident investor Third Point , Yahoo! formed a special committee comprised of three independent board members and an independent legal counsel to conduct a review of CEO Scott Thompson’s academic credentials and the circumstances surrounding his appointment.

Over the weekend, Yahoo’s finalized the terms of Scott Thompon’s departure. The Board of Directors appointed Fred Amoroso as Chairman of the Board of Directors and Ross Levinsohn as interim CEO, replacing Mr. Thompson, effective immediately. Yahoo! also settled its proxy fight with Third Point LLC, and nominated three of the hedge fund’s nominees to its formal slate for election to the Board.

Based on public regulatory filings available on edgar.sec.gov, Mr. Thompson received an annual base salary of $1 million. He received an annual equity grant for 2012 with a value of $11 million and a special signing bonus grant of $5 million in February 2012. In addition, Mr. Thompson received a Make-Whole Cash Bonus of $1.5 million and the Make-Whole RSUs valued at $6.5 million, which match compensation he had to forego while the President of Paypal. These have clawback provisions. In addition, Scott Thompson received benefits, participated in an incentive compensation program (which was guaranteed on the low end for 2012), and had 20 days of paid leave.

According the Wall Street Journal, Mr. Thompson’s disclosed to Yahoo!’s board that he has been diagnosed with thyroid cancer. While there has not been a formal announcement from Yahoo!, WSJ’s AllThingsD contributor Kara Swisher claims the parting is “for cause,” which would allow the severance to be much smaller than a termination without cause. Wall Street Journal also reports that Mr. Thompson’s termination was negotiated over the weekend “along with some severance pay.”

Details of Scott Thompson’s golden parachute may or may not be disclosed by the new Yahoo! board in the proxy filings prior to Yahoo!’s 2012 annual meeting. If CNN Money is right, Thompson may even owe Yahoo! up to $7 million. In 2011, the annual meeting was held on June 23.

Facebook and Friend Microsoft Handshake over AOL Patents

Microsoft and Facebook announced on Monday, April 23, 2012, that Facebook is acquiring 650 patents from Microsoft, that the latter acquired earlier this month from AOL, for $550 million in cash. As part of this transaction, Facebook will obtain a license to the other AOL patents and patent applications being acquired by Microsoft and will grant Microsoft a license to the AOL patents and patent applications that it acquires. Bloomberg reported last week that Facebook had initially bid on the AOL patents but later lost out to Microsoft.

Microsoft had "Friended" Facebook years ago. First there was an ad revenue sharing agreement and then Bing started indexing public Facebook posts. Bing also became the go to search engine on Facebook. In October 2007, Microsoft reportedly edged out rivals such as Google to buy a 1.6% stake in Facebook for $240 million. It was a major vote of confidence and a valuation that at the time was called "astronomical" by the New York Times. At the time, Facebook trailed in size behind Myspace, and had revenue of only $150 million annually. Microsoft's stake is now valued at an estimated $1 billion plus.

Facebook founder Mark Zuckerberg, like Bill Gates, dropped out of Harvard to found his company. In 2010, Zuckerberg joined Microsoft's Bill Gates and Warren Buffett in signing the "Giving Pledge," a commitment to give away a majority of his fortune.

ZDNet's Emil Protalinski's been following the Microsoft Facebook friendship for some time now.

But the AOL patents deal may be about rivals, even though it is among friends. For example, PC World suggested the reason Microsoft paid a rich premium valuation for the AOL patents in the first place was to go on the offensive with Google for the 265 patents that were of strategic importance to it. Although patent research firm Envision IP calculated that only 29 of the AOL patents related to social media, Facebook, which is currently in a bitter public patent dispute with Yahoo ahead of its IPO, may have gone on the offensive to strengthen its intellectual property (IP) fortress.Yahoo responded to Facebook's AOL patent acquisition with its own take, which ZD Net published.

According to TechCrunch, which is owned by AOL, Facebook started 2012 with only 56 patents. Since then, it has acquired 750 patents from IBM for $83 million (according to its amended registration statement), patents related to the Instagram acquisition, and now 650 patents from AOL for $550 million. This brings the total patents owned by Facebook to 1400, and it has another 600 patents pending globally.

Related news: Facebook May Have Bid on AOL Patents

Did Spat with Yahoo Prompt Facebook to Bid on AOL patents?

What might have prompted Facebook, which filed to go public in February, to make an unsolicited bid for the AOL patent portfolio? AOL's 29 patents that could be applied to social networking systems?

Co-incidentally on March 12, Yahoo! filed lawsuit against Facebook in the U.S. District Court for the Northern District of California alleging "Facebook's entire social network model, which allows users to create profiles for and connect with, among other things, persons and businesses, is based on Yahoo's patented social networking technology." New York Times reported that Yahoo! has threatened Facebook with “10 to 20″ of its patents, purportedly related to “Facebook’s ads, privacy controls, news feeds and messaging service.” Facebook countersued Yahoo! on April 3 in a the U.S. District Court in San Francisco. Less than a week later, after it reportedly lost out on the AOL patent bid, and on the same day Microsoft unveiled the AOL deal, Facebook, said it is buying Instagram photo-sharing for $1 billion.
If Microsoft intends to sell most of the non-core patents it acquired from AOL, and Facebook is still interested, the second time might be the charm for Facebook's bid at AOL's patents.


More on Yahoo! News here: Facebook May Have Bid on AOL Patents