UPDATE: Yahoo confirmed in a Sunday afternoon press release that CEO Scott Thompson will step down, effective immediately.
As AllThingsD predicted earlier, the company's board appointed Ross Levinsohn interim CEO. Fred Amoroso will take over as board chairman, replacing Roy Bostock. The company has also reached a settlement with investor Third Point and will replace three additional board members.
Under the Board's settlement agreement with Third Point, three Third Point nominees — Daniel S. Loeb, Harry J. Wilson, and Michael J. Wolf — will join the Yahoo! Board, effective May 16, 2012. Mr. Bostock, along with Patti Hart, VJ Joshi, Arthur Kern and Gary Wilson, all of whom previously disclosed their intentions not to stand for re-election, as well as Mr. Thompson, have decided to step down from the Board immediately.
Wrote new chairman Amoroso, "The Board is pleased to announce these changes and the settlement with Third Point, and is confident that they will serve the best interests of our shareholders and further accelerate the substantial advances the Company has made operationally and organizationally since last August."
Scott Thompson had been serving as CEO since January.
PREVIOUSLY: After more than a week of controversy, it looks like Yahoo CEO Scott Thompson will step down from his position.
According to AllThingsD's Kara Swisher, multiple sources say that the company will cite "personal reasons" for Thompson's departure.
However, it's also likely that the former PayPal president is quitting the company because of a resume discrepancy brought to light late last week by hedge fund Third Point, a Yahoo investor whose founder and CEO Daniel Loeb wrote that Thompson had "embellished his academic credentials."
In a letter addressed to the Yahoo board on May 3, Loeb pointed out that Thompson's CV said he earned an accounting and computer science degree from Stonehill College, when in fact he had obtained only an accounting degree. Yahoo initially said the inconsistency was an "inadvertent error," Reuters reported. The Yahoo board said it would investigate the matter, and Thompson issued an apology to employees.
"I want you to know how deeply I regret how this issue has affected the company and all of you," Thompson wrote on May 7. "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."
Yahoo named Thompson its new chief in January. He succeeded ousted CEO Carol Bartz, who had served from January 2009 until September 2011. In April, Thompson began to outline his plan for the struggling web giant's turnaround.
AllThingsD also reports that Yahoo’s global media head Ross Levinsohn may be taking the reins as interim CEO, and that the board may reach a settlement with Daniel Loeb over the controversy.
Sources have provided the New York Times with the terms of the settlement:
Under the outlines of a proposed settlement, the activist hedge fund manager and two of his director nominees, Michael J. Wolf and Harry Wilson, will be seated on the board. A fourth candidate, former NBC head Jeff Zucker, will withdraw his nomination.
Earlier this week, it was reported that Yahoo board member Patti Hart, responsible for the vetting of Thompson, will leave her position on the board.
A Yahoo rep was not immediately available to comment.
Take a look at some early Twitter reactions to news of Yahoo's big shakeup on Sunday.