When the activist shareholder Daniel Loeb confronted Yahoo’s directors on May 3 with the possibility that Yahoo’s recently hired chief executive, Scott Thompson, might have falsified his résumé by claiming to have a computer science degree, their initial reaction was disbelief. “Scott is a forthright, no-nonsense, straightforward personality and a likable guy,” one director said.


But just 11 days later, Mr. Thompson’s credibility with the board was in shreds, Mr. Loeb and two of his allies had landed the board seats he’d been agitating for since starting a proxy fight earlier this year, and Mr. Thompson was out, despite his last-minute revelation that he was battling thyroid cancer.


Interviews this week with people involved in the fast-moving events and the board’s decisions reveal how what at first seemed a small and improbable allegation from an annoying dissident shareholder turned into a major crisis, thanks largely to Mr. Thompson’s own evasions and missteps. In the end, the board had little choice but to sever ties with its chief executive of only five months and largely give Mr. Loeb what he wanted. (Mr. Thompson didn’t respond to a message seeking comment, and hasn’t made any public statement since leaving Yahoo. His lawyer declined to comment.)


“This went to the basics of corporate governance,” a director at the time told me. “The situation was spinning out of control. We had to put our individual interests aside and give the company a chance to survive and regain its footing.” (Like others interviewed, he asked not to be named since the events remain under investigation by a board committee and outside lawyers. Shareholder suits are likely.)


The crisis couldn’t have come at a worse time for Yahoo, an Internet pioneer and owner of what was once the world’s most visited Web site. Yahoo rejected a lucrative takeover bid from Microsoft in 2008, has struggled under intense competition from Google and Facebook, and has been dogged by management turmoil that it had hoped to end by hiring Mr. Thompson. “This was causing incredible turmoil and making the company even more fragile than it was,” the director said.


After getting Mr. Loeb’s incendiary letter, which said Mr. Thompson had graduated from Stonehill College in Massachusetts with an accounting degree, and the college didn’t even offer a computer science major at the time, the board appointed a three-member committee to investigate. The departing board chairman, Roy Bostock, who had said he would be stepping down in July, was delegated to meet with Mr. Thompson.


The board’s initial hopes that it was all an easily explained mistake were quickly dashed. Instead of offering Mr. Bostock an explanation, Mr. Thompson fumed at Mr. Loeb and his tactics. Mr. Bostock stressed that the only way to deal with the situation was to “immediately tell the absolute and total truth, whatever it is” and make it public, according to a person with knowledge of the conversation. Unspoken but implicit was the understanding that if he’d ever misstated his credentials, Mr. Thompson should publicly admit it, apologize and offer to resign. In that case, the board would have assessed the situation, but might well have stood behind him. Mr. Thompson seemed to get the message, but said nothing more to clear up the matter.


Almost immediately, directors began getting calls from some of Yahoo’s top employees and managers. Saying one’s major was computer science rather than just accounting might seem a minor discrepancy to some people, but not in Silicon Valley where Yahoo has its headquarters and where thousands of engineers live and work. “It was a very emotional situation for employees,” one person involved said. “They were saying, ‘How can I work for a company that has a C.E.O. who claims to be a computer scientist when he’s not? I can’t work here if that’s true.’ “