If you’ve been following the major tech trades, you’ll know that Scott Thompson, former head of eBay’s PayPal unit and CEO of internet giant Yahoo, has been embroiled in an embarrassing scandal about a misrepresentation on his resume. It turns out that Mr. Thompson’s resume specifically says that he had a degree in computer science from Stonehill College – something that turned out to be flat-out false, and which ultimately led to Thompson stepping down as CEO.
I may be in the minority here, but I feel that Thompson lying on his resume was probably not the biggest deal, especially since I doubt that degree made any real difference to why Yahoo hired him. But what was probably a heck of a lot worse was that the misrepresentation made its way into Yahoo’s 10K — “Mr. Thompson holds a Bachelor’s degree in accounting and computer science from Stonehill College” — a filing to the SEC that Thompson signed, certifying that:
I, Scott Thompson, certify that:
1. I have reviewed this Amendment No. 1 to the Annual Report on Form 10-K of Yahoo! Inc. for the year ended December 31, 2011; and
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
This changed Thompson’s sin from one of “just” padding a resume to one of either (1) not carefully reading one of the most important documents a company can issue and/or (2) outright lying to the government and to Yahoo’s investors – not a good sign for a new (and now ex-) CEO. And, also seriously calls into question the Yahoo board of directors’ judgment in that they failed to do a very simple thing such as running a basic background check on a key hire.
As someone who is an investor (both in my job in venture capital investing in startups and outside of my work in the public market) and has been lucky enough to participate in board meetings for some of our portfolio companies, these are particularly alarming signs. While the underlying lie is not really that big a deal, being able to trust the executives and the board members who are supposed to have your best interests at heart is – and misrepresentations in a regulatory filing speak very poorly to a person’s thoroughness, competence, and/or credibility.
The next Yahoo CEO has a difficult job ahead – not only will he/she need to address the underlying problem of Yahoo not having a coherent vision/strategy and having demoralized workers, he/she will likely need to manage the construction of a better board of directors and the implementation of new policies and procedures to prevent this type of thing from happening again.