Yahoo! boss Scott Thompson stepped down May 13 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 mutinous 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 May 16.
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-flourishing 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 began investigating a charge leveled by Loeb that Thompson misstated academic credentials by claiming on his CV a computer science degree that he never earned.
Yahoo! acknowledged an "inadvertent error" in the CEO's online bio.
Third Point, which owns 5.8% of the struggling tech giant, wanted Thompson fired.
Thompson was named Yahoo! chief in Jan., four months after the company sacked his predecessor Carol Bartz over her unsuccessful efforts to turn the company around.
"To get another CEO is as hard as it is ever going to be for that company," said independent analyst Rob Enderle of Enderle Group.
"Anyone with the ability to do the job is probably too smart to take it."
Bartz was fired after less than three years in the job. She 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 put the company back on course.
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.
On Thompson's watch, Yahoo! filed suit against Facebook in U.S. District Court in San Francisco accusing the social networking giant of infringing on 10 patents.
Facebook filed a countersuit contending that Yahoo! was violating the social network's patents -- and not the other way 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.
Yahoo's share of overall U.S. online ad revenue dropped from 15.7% in 2009 to just 9.5% last year, according to industry tracker eMarketer.
While the online advertising market is expected to grow 23.3% to $39.5 billion this year, Yahoo's share of revenues will fall further to 7.4%, eMarketer forecast.
Thompson's ouster is likely to have other Silicon Valley firms, and unhappy investors, digging into whether top executives exaggerated credentials on career paths, according to Enderle.
"This may be an endemic problem that goes outside Yahoo!" Enderle said.
Copyright Agence France-Presse, 2012