Ross Levinsohn, who is the company's head of global media, will serve as interim CEO while the board searches for a permanent replacement. Fred Amoroso has been named chairman of the board, Yahoo also announced. Those changes are effective immediately.

Thompson was hired in early January and was the third CEO to be tapped in just a little over three years, and this latest incident is sure to continue the ongoing turmoil that Yahoo, a pioneer in the Web portal space, has endured.

Besides the executive shuffling, the company also struck a deal to end a proxy fight by activist shareholder Daniel Loeb, who leads the Third Point investment fund, which owns about 5.8 percent of Yahoo. Loeb was the one who brought the resume embellishment to light and notified the U.S. Securities and Exchange Commission of it, plunging the company into its latest controversy. Loeb and two of four other people that he had pushed the board to name as directors will be seated on the board. The other two are Michael J. Wolf and Harry Wilson. Former NBC chief Jeff Zucker, who was the fourth candidate proposed by Loeb, has been withdrawn as a board nominee.

Five current members of the board who were to leave their positions at the company's upcoming annual meeting will resign their posts as of Wednesday, the company said. Besides non-executive Chairman Roy Bostock, whom Amoroso replaces, they are Patti Hart, VJ Joshi, Arthur Kern and Gary Wilson.

"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 and further accelerate the substantial advances the Company has made operationally and organizationally since last August," Yahoo said in a statement announcing the changes.