A fresh blight has struck Yahoo, which continues to flounder as management slashes its workforce in a bid to put the ailing company back on its feet. The resume of recently hired CEO Scott Thompson claims he holds a college degree that he never actually earned.
The news erupted on Thursday in the midst of a proxy fight for control of Yahoo’s board. The issue of Thompson’s credentials was brought up by activist shareholder Daniel Loeb, who leads the Third Point investment fund.
Thompson does not have degrees in both accounting and computer science as Yahoo claims, Loeb told the Securities and Exchange Commission (SEC) in a letter .
“Scott Thompson received a bachelor of science degree in business administration with a major in accounting from Stonehill College,” Yahoo spokesperson Dana Lengkeek told the E-Commerce Times. Previously, Yahoo claimed Thompson also held a degree in computer science, which is untrue. Lengkeek asserted that the error was inadvertent.
The error “in no way alters the fact that Mr. Thompson is a highly qualified executive with a successful track record leading large consumer technology companies,” Lengkeek continued. Indeed, Yahoo’s seen its profits grow in its first full quarter under Thompson.
Yahoo will “be reviewing this matter, and upon completion of its review, will make an appropriate disclosure to shareholders,” Lengkeek said.
The Faint Waft of Decay
A “rudimentary Google search” revealed that Thompson’s degree is in accounting only, Loeb said. Third Point confirmed this by checking with Stonehill College, he added.
Problems with Thompson’s resume seem to have first appeared in 2008, when his bio on eBay’s site, put up while he was president of PayPal, indicated he had a degree in accounting and computer science from Stonehill. A 2008 eBay Schedule 14A proxy statement filing, which listed information about Thompson as of March 31, 2008, listed him as only having a B.S. degree in accounting from Stonehill.
“The search committee should have done a deep background check and found this,” Rob Enderle, principal analyst at the Enderle Group, told the E-Commerce Times. “Because this speaks to the CEO’s ethics you can’t take his background at face value.”
Loeb also alleged that Patti Hart, who chaired Yahoo’s search committee in its quest for a new CEO and also heads its corporate governance committee, seemed to have discrepancies in her own stated academic background. Corporate filings indicate she has a bachelor’s degree in marketing and economics from Illinois State University, but her degree is in business administration, he claimed.
“We can confirm that Patti Hart holds a bachelor of science degree in business administration with specialties in marketing and economics from Illinois State University,” Yahoo’s Lengkeek said.
The Impact on Yahoo
Yahoo has seen a decline since it turned down a US$44.6 billion unsolicited bid from Microsoft back in 2008. Cofounder Jerry Yang stepped down as CEO in November of that year and was replaced by Carol Bartz in January of 2009. Bartz was fired last September.
In January 2012, Yang left Yahoo completely, and Yahoo hired Thompson as CEO. Thompson began his tenure by cleaning house at the top level of management, which has been beset by accusations that it wasn’t functioning properly.
Yahoo is in a bind here because its policy probably calls for termination in cases of resume falsification, Enderle said. Failure to fire Thompson will make Yahoo appear to be discriminating against other employees, “which will lead to litigation, both from other Yahoo employees who were or will be dismissed for the same reason, and shareholders.”
However, Yahoo “aren’t certain of getting anyone as good as Thompson if they fire him, so the board’s in a dilemma,” Enderle pointed out.
Networking Can Hurt
Due diligence when hiring staff may seem to be normal practice, especially when the post to be filled is at a high level.
But that’s not necessarily the case, Michael Murphy, a retired a human resources director, told the E-Commerce Times. “It’s not uncommon when you’re hiring upper level management to not check their references because you probably already know them personally and know them by reputation professionally.”
“In conjunction with our recently completed initial public offering, Mr. Thompson provided Splunk with accurate information regarding his academic background, and his undergraduate degree is accurately reported in our prospectus,” Paul Wilke, Splunk’s director of public relations, told the E-Commerce Times. The company has updated Thompson’s biography on its website, as that “contained information that had been obtained from third parties.”
F5 didn’t respond to our request for comment for this story.