SAN FRANCISCO — Yahoo! boss Scott Thompson stepped down on Sunday in the face of controversy about his allegedly inflated resume, leaving the struggling Internet pioneer seeking its sixth CEO in five years.
As part of a truce in a proxy war with activist shareholder Daniel Loeb, Ross Levinsohn became interim Yahoo! chief and Fred Amoroso took charge of the board of directors.
"Yahoo! has been struggling over recent years and this new incident only makes matters worse for the company," said technology industry analyst Jeff Kagan.
"Yahoo! rode the wave up during the last decade, but during the last several years has crossed over the top and has been heading down the other side."
The changes are part of a settlement with Loeb's hedge fund Third Point, which is waging a proxy battle at the Sunnyvale, California-based firm.
Loeb and two of his picks -- Harry Wilson and Michael Wolf -- will take seats on the Yahoo! board Wednesday.
Five current board members, including director Roy Bostock and Patti Hart, will step down immediately and not end their terms at this year's annual shareholders meeting as originally planned, according to Yahoo!
"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," Amoroso said in a statement.
Levinsohn's background includes running Fox Interactive Media when the News Corporation property bought then-social networking star MySpace for $580 million and cut a lucrative search deal with Google.
Levinsohn recently ran Yahoo! advertising sales in the Americas.
Yahoo! last week created a special committee look into a charge leveled by Loeb that Thompson misstated academic credentials by claiming on his CV a computer science degree that he never earned.
Third Point wanted Thompson to be fired for misrepresenting his educational background and called for the release of documents about the recruitment of Thompson in a scathing filing with regulators.
Yahoo! has acknowledged an "inadvertent error" in the CEO's online bio.
Third Point, which owns 5.8 percent of the struggling tech giant, has agreed to withdraw its slate of candidates for the Yahoo! board, avoiding a proxy battle. No date has been announced for the annual meeting of shareholders.
Thompson was named Yahoo! chief in January, four months after the company sacked his predecessor Carol Bartz over her unsuccessful efforts to turn the company around.
Bartz, who was fired after less than three years in the job, was blamed for failing to recover market share and to build earnings and investor returns.
But she fired back that there was a lack of leadership and direction from the board of directors, which includes Yahoo co-founder and former chief executive Jerry Yang.
Bartz blasted her overseers as "the worst board in the country" after being pushed out the door.
Thompson left a job as head of online payments firm PayPal, a key unit of Internet auction powerhouse eBay, to take the Yahoo! helm.
Under Thompson, Yahoo! dumped products along with workers in a quest to return the faded Internet star to glory.
He announced the moves in April.
Yahoo! said in April that it would slash some 2,000 jobs in a purge aimed at becoming a "smaller, nimbler, more profitable" company.
The 17-year-old firm had more than 14,000 employees at the end of 2011.
In words that seem portentous in the context of Sunday's announcement, Thompson said that "a streamlined Yahoo! will help us get things done at the pace required," while laying out his strategy for turning the company around.
Yahoo! has been trying to reinvent itself as a "premier digital media" company since the once-flowering Internet search service found itself withering in Google's shadow.
As the company strived for a new identity, it saw an exodus of talent that commenced during a failed bid by technology giant Microsoft to buy Yahoo! four years ago for about $45 billion.