Thompson's departure comes "after a poorly handled controversy," Jeff Kagan, an independent technology analyst said in an email Sunday. "Yahoo has been struggling over recent years and this new incident only makes matters worse for the company."

He predicted that "this CEO mess is going to leave Yahoo all tied up for at least several more quarters."

Thompson, who was previously an executive with eBay, was hired by Yahoo to try to get the struggling Internet company back on track after years of leadership changes in the midst of unsteady financial performance and competitive pressure from Google and more recently from Facebook. But then Loeb pushed his own slate of candidates -- himself included -- for the board of directors and as part of that, revealed that Thompson did not have a college degree in accounting and computer science, contrary to what was on his resume and information in the company's financial filings.

Thompson sought to quell the situation by saying it was the fault of the head-hunting firm Heidrick and Struggles, which he said was responsible for the mistake when he was in the running to become president of eBay's PayPal unit in 2000. However, Heidrick and Struggles replied that it was "verifiably not true" that the firm was responsible for the mistake. The firm told Yahoo's board that it had a copy of the resume Thompson submitted that included the computer science degree on it, according to published reports.

He also reportedly met with Yahoo employees in two meetings to try to clear up the matter and in a statement released by Yahoo he apologized that questions about his resume had become a "distraction." However, those attempts were unsuccessful and the controversy continued.