The shareholder, activist hedge fund manager Daniel Loeb, told Yahoo's board of directors last week that he might take legal action if Thompson isn't ousted by noon EDT Monday.
Loeb contends Yahoo needs to get rid of Thompson because he allowed an inaccuracy about his academic credentials appear in a regulatory filing, as well on the company's website for investors. Thompson's biography claimed he had a bachelor's degree in computer science as well as accounting from Stonehill College near Boston.
After Loeb raised questions about Thompson's education, Yahoo acknowledged that he never got the computer science degree. That distortion violated Yahoo's own code of ethics, Loeb said.
Experts in corporate ethics and governance believe Yahoo has to get rid of Thompson to preserve its own credibility. If Thompson is dumped, it will be Yahoo's second CEO firing in eight months.
Loeb controls a 5.8% stake in Yahoo through his hedge fund, Third Point LLC. He is trying to win four seats on Yahoo's board, including one for himself.