That’s why the annual shareholders meeting Thursday sounded a tad off key. (Sounded because the company that brags about its video views only webcast the audio for the Santa Clara, Calif., event.) Listening to interim CEO Ross Levinsohn talk about a road map he may not be there to chart or navigate rang a little hollow. Not his fault — Levinsohn is at heart a salesman who knows when to pitch and how to gauge answers.

But knowing that the 11 board members elected for a full term at the meeting have yet to agree on a CEO — and that the entire process might wind up as nothing more than an elaborate exercise — makes it hard to take as a real sign of where Yahoo is headed.

Ten of the board members were on hand for the meeting led by Chairman Fred Amoroso, who stressed the differences between this version and the last one: All of the board members are independent and eight of the 11 joined in the last five months. (Weather Channel CEO David Kenny, one of the holdovers between the two boards, couldn’t make it.)

Amoroso referred only obliquely to the pressures that got some of them there, saying that there wasn’t anyone on the board he didn’t want to work with. That was an implicit reference to activist investor Dan Loeb, head of Third Point, who acquired enough stock, uncovered CEO Scott Thompson’s claim of a degree he didn’t have in computer science, and made enough noise (and sense) to force a showdown with the board. The settlement resulted in Thompson’s ouster, Levinsohn’s interim appointment and put Loeb on along with Harry Wilson and Michael Wolf. His fourth candidate, former NBCU CEO Jeff Zucker, withdrew as part of the agreement.

The annual shareholders’ meeting came two months after that deal was struck and a formal search began for yet another CEO. To be fair, as far as I know the board never promised publicly to end the search by a certain date. That pressure is coming from other sources (including folks like me, to be sure), but mostly from those inside and out who think the best shot lies with the candidate who’s already doing the job.

Actions gave credence to Levinsohn as frontrunner, including the way he has been allowed to make senior hires like Chief Revenue Officer Michael Barrett and unwind Thompson’s reorg, as well as the approval of complicated deals like the agreement that ended the Facebook patent dispute started by Thompson with board approval or the resolution of long-standing differences over Alibaba. (Amoroso, the former CEO of Rovi, was seen as one of the backers of that aggressive patent strategy.) The person some perceived as his top competition, Jason Kilar, “graciously” declined to be considered last Friday, seeming to set the stage for an announcement. As one source told AllThingsD:

We’re going to make sure that we have looked at every strong candidate possible. … This is a CEO selection the board cannot afford to be wrong on.

Levinsohn gave the management presentation during the hour-long meeting, describing a road map for now based on content, technology and realizing value from Alibaba. He also took questions from some shareholders. One of the first: “What role Yahoo has in the future? Where are we going to focus?” Levinsohn replied:

“We have really put our energy against being this tech-powered media company. If you want to be in the tech and media business you need to be in both very aggressively.”

That means leveraging the scale of 700 million monthly unique users with “compelling experiences for viewer.” He added later, “We also need to market and program our sites better than we have in the past.”

He spoke of balancing algorithms with human editors on the Yahoo.com front page. “We blend technology and human touch. That’s a unique proposition for somebody the size of Yahoo.” It’s also, he said, an amazing white space for Yahoo to own as a massive distributor, a creator and curator of content, and a creator of technology.” No stats yet on recently launched ad-data project Genome.

And after bragging that because of the ABC News deal and other moves, more than half of news videos watched in May were from Yahoo, he heard from a shareholder who raved about Yahoo Sports and Levinsohn’s own background in sports, but complained that the Yahoo video experience was so bad, he looks for the same videos on YouTube. I’m not sure what his technical issues were but one very non-technical message came through loud and clear: “Your problem is simple. One word: Execute.”

Levinsohn picked up on the theme later when he acknowledged the need to deliver on the products and initiatives being mentioned, “If we don’t execute, none of it matters. … My leadership team that’s currently in place will focus on that every day.”

And that’s the rub. As job auditions go, it went well. Whether any of it turns out to be meaningful in the long run, is up to the board. It’s not often that an exec ends a meeting with the usual “we look forward to seeing you all again next year” and you wonder whether he’ll be there.

Analyst weighs in

The lack of clarity about the CEO job runs the risk of blurring what has been accomplished and putting off a real plan even longer. S&P analyst Scott Kessler’s brief client note on the meeting included this:

We think Levinsohn is a very strong candidate for the position and that YHOO would benefit from his appointment sooner rather than later.

He repeated his strong buy opinion for the stock and didn’t say whether it would be affected by a prolonged delay in this CEO search.

The CEO search isn’t the only aspect being watched closely by analysts. Yahoo reports second quarter earnings Tuesday. Those results will matter a lot more than anything that happened at the annual meeting. And in that case, the “interim” may help Levinsohn remind people the Q2 numbers reflect Thompson’s Yahoo more than his. If he gets the job, though, from here out it’s all his.

Speaking of execution

One issue that didn’t come up during the questions: how did Yahoo let a file with 400,000 user passwords get stolen?

The file dates back a couple of years to the acquisition of Associated Content, now known as the Yahoo Contributor Network, and includes other companies’ logins as well. You could read plenty about it while the meeting was going on and after but anyone looking for info on Yahoo’s corporate blog or in its press releases was out of luck. Yahoo said fewer than 5 percent of the stolen Yahoo passwords were valid.

Credit: Levinsohn photo courtesy of Yahoo Advertising

In the weeks since, Levinsohn has made key hires, including former News Corp. colleague Michael Barrett as EVP and chief revenue officer, and has unwound Thompson’s version of what the company should look like. Each move lent credence to the idea that he would be CEO when the dust settles, but the search didn’t stop. A week before Yahoo’s July 12th annual meeting, the drumbeats are getting louder – but that doesn’t mean Levinsohn is out…

Thursday, in an all-caps tweet, Reuters tried to sell the idea that the search committee is talking to Jon Miller, the chief digital officer at News Corp. For nearly any other media CEO job, that report would make sense – Miller is a usual suspect of the first degree. But Miller not only is a friend and former business partner of Levinsohn’s, he endorsed him for the job on stage at paidContent 2012 and explained why he thought the board was going in the right direction. That was a non-starter. (Reuters tried to tone it down later).

Hulu CEO Jason Kilar’s name also has also come up, tweeted by Reuters as being on the shortlist and mentioned by Kara Swisher as the only real contender other than Levinsohn. That wouldn’t be surprising. Kilar has been a natural on many CEO search committee lists and he has a reputation as someone who can lead a product-driven company. Kara paints it as a media vs. product decision for the board. Given her track record on Yahoo personnel moves, it can’t be ignored, but a source tells paidContent he’s not in the mix.

The flurry of reports makes sense in terms of timing. Yahoo’s annual meeting is next Thursday. It’s the first for the compromise board formed with Dan Loeb, the activist shareholder who outed Thompson’s lack of a computer science degree and lobbied hard for a board makeover. Thompson’s resume was the wedge he needed to get himself and two others on the board.

Does Yahoo need someone like Kilar, who would be starting from scratch, more than someone like Levinsohn who is well into the Yahoo learning curve after nearly two years and has a strong digital media background as well as relationships with the key content and advertising players?

The theory behind hiring Bartz and Thompson was they could hire people to lead media — Levinsohn was hired by Bartz — but their tech/business backgrounds made them better suited for the job. Bartz was CEO of AutoDesk; Thompson was president of eBay’s PayPal unit and brought a strong background in ecommerce.

Kilar’s allure, in addition to his product props, is that he has been running a media company for several years now. He gets a bonus making it through those years with a board full of strong-minded senior media execs from Hulu’s equity partners News Corp., Disney and, until the Comcast deal, NBC Universal. He made it through the loss of the initial backers inside those companies, too.

Some people I know have been waiting for him to jump ship for so long that every day could be “Jason is leaving” day. Eventually, they will be right. Others point out that Kilar started with a massive advantage in Hulu’s access to prime-time shows from three of the four majors and deals for distribution. He didn’t have to contend with an existing portal that has nearly 700 million global unique users and years of product.

Timing and momentum

However attractive other candidates might seem, the real decision here may well be one of timing and momentum. Choosing anyone from outside means Yahoo will be starting over. Again. Unless somehow the board hires someone willing to go by another exec’s blueprint, that’s at minimum a three-month process and longer for execution. A company with two CEOs and two interim CEOs in three-plus years can’t afford to start from scratch. (That’s one reason Rob Glaser is back as interim CEO at RealNetworks; as the founder and chairman who never really left, he can step right in).

Levinsohn has supporters on the board; maybe it’s just that no-one wants to be thought of as anything less than thorough at this point. Levinsohn, chosen by Rupert Murdoch to form Fox Interactive Media, made a splash by buying MySpace, IGN and other properties, then got dinged by some as not being an operator. The interim role gives the board a chance to see him operating at that level, a kind of audition, and to get a little distance between the recent unpleasantness and a full appointment. In the meantime, he’s been relatively quiet in public, although he led Yahoo’s delegation to Cannes, where he appeared on stage.

Sometimes interim equals caretaker. Sometimes, it can’t. CFO Tim Morse acted in that regard as interim CEO between Bartz and Thompson. When Levinsohn got the interim nod, I suggested it was a choice between business-as-usual and moving forward but that the board made a mistake by not going all the way:

Starting another CEO hunt at this point when you have a qualified in-house candidate just prolongs the drama and raises another series of questions when the focus should be on answers.

Wait too much longer to make a choice, send out too many vibes you might not stick with the leader you have, and you risk that momentum.

Sometimes “interim” is a solution; sometimes it’s the problem.

Thursday, Loeb, the CEO of hedge fund Third Point, revealed something that should have been caught well before now: CEO Scott Thompson doesn’t have the education credentials that were listed in his bio and included in Yahoo SEC filings. Thompson did graduate from Stonehill College but his degree was in accounting — not accounting and computer science. The school didn’t have a computer science department when he was there. Yahoo’s response confirmed the inaccuracy, calling it an “inadvertent error” and promising a probe into that, as well as another Loeb assertion that director Patti Hart was claiming a degree she didn’t have.

Now Loeb is demanding that Thompson be fired for cause by Monday and that Hart resign. He also wants to be added to the board along with his full slate, which includes Jeff Zucker, Michael Wolf and Harry Wilson. Given the board’s resistance to anything like that so far, he could end up forcing the resignations and still not getting on the board.

It doesn’t help Thompson’s case that audio of an interview has surfaced where he had the chance to correct the computer science error and instead stuck to it and called himself an “engineer.”

What can Loeb do?

Holding 5.8 percent of the stock gives him a voice but he doesn’t own enough to force action. What he can do is make life more miserable for Thompson and the board while he tries to gain more voting power.

As for Thompson, he may be able to ride this out but the past history makes that more difficult.

Either way, it’s an energy drain that Yahoo doesn’t need.

Loeb’s latest broadside:

May 4, 2012
Board of Directors
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089

Dear Board of Directors:

Yahoo!’s initial response yesterday to Third Point’s identification of material inaccuracies in both CEO Scott Thompson’s and Director Patti Hart’s educational record was insulting to shareholders. We assume that these initial statements were attributable to Mr. Thompson and were not made with the Board’s approval. While we appreciate the Board’s statement late last night that it would conduct an investigation, unfortunately, for this Board and this Company, it is too little and months too late.

To assert that years of inaccurate SEC filings, website biographies and, most likely, D&O questionnaires and curriculum vitae (including, presumably, the CV provided to Yahoo! when Mr. Thompson reached out for the job) were “inadvertent” is, in our view, the height of arrogance. Mr. Thompson and the Board should make no mistake: this is a big deal. CEO’s have been terminated for less at other companies. The Company’s Preliminary Proxy Statement filed on April 27, 2012 (at page 22) states that the “minimum qualification for service as a director of the Company are that a nominee possess. . . an impeccable reputation of integrity and competence in his or her personal and professional activities.”

Furthermore, Yahoo!’s response “confirming” that Ms. Hart “specialized” in Marketing and Economics, rather than having earned her degree in such subjects (as Ms. Hart has asserted in filings for years) is a similar canard. A “specialty” is not a major. It is not a “minor”. We don’t know what it is, but we do know that like Mr. Thompson, Ms. Hart has been misrepresenting her actual degree to the investing public for years. Again, we hope that the Board does not accept this feeble attempt at “spin” as a justification for Ms. Hart’s misrepresentations.

Irreparable damage to Yahoo!’s culture will continue every day that the Board allows Mr. Thompson and Ms. Hart to remain at the helm of the Company after having clearly demonstrated that they lack even the “minimum qualifications for service as a director of the Company.” Mr. Thompson, in particular, cannot possibly have any credibility remaining with the all-important Yahoo! engineers, many of which earned real – not invented – degrees in computer science. Moreover, permitting Mr. Thompson and Ms. Hart to stay with the Company after apparently violating the Code of Ethics sends a message to all Yahoo! employees that a different set of rules applies at the top.

Third Point, Yahoo!’s largest outside shareholder with over $1 billion invested, called yesterday for an immediate investigation if our assertions were true. The Board appears to have acceded to this demand. Its response must be swift and decisive. In that regard, Third Point will consider it grounds for further action if the Board does not take the following steps by Noon EDT on Monday, May 7th:

1) Publicly reveal the process by which it vetted Mr. Thompson as a potential CEO candidate. This disclosure should include the release of all minutes of any meeting at which Mr. Thompson’s candidacy was discussed and any reports or other materials upon which directors relied to evaluate Mr. Thompson’s candidacy.

2) Disclose whether any Board member, including Maynard Webb, who has long-standing ties to Mr. Thompson, and Ms. Hart, who headed the Search Committee, was aware of Mr. Thompson’s deception prior to receipt of Third Point’s letter yesterday.

3) Provide shareholders with all information regarding the director nomination process, including the so-called “skills matrix” referred to in the Company’s preliminary proxy statement, which the Board purportedly used to determine the qualifications of various candidates, including Third Point’s nominees.

4) Terminate Mr. Thompson for cause immediately given his demonstrable unsuitability to remain Chief Executive Officer and a director of Yahoo! and accept the resignation of Ms. Hart for similar reasons.

Finally, we urge the Board to stop wasting valuable company resources and drop its resistance to placing the Third Point nominees on the Board. We are prepared to join immediately. Once on the Board, our first tasks will be to work with the remaining Board members to find Yahoo! a new leader with the qualifications and integrity to lead the Company and install best practices of corporate governance. The Company can ill afford to continue this misguided fight with its largest outside shareholder while it has so many other fires to put out. There has been enough damage already.

Sincerely,
Daniel S. Loeb
Chief Executive Officer
Third Point LLC

For some context and background, Andrew Ross Sorkin profiles Icahn in today’s NYT discussing his strategy and what makes him tick: “He