Should Yahoo fire CEO Scott Thompson?

Yahoo CEO Scott Thompson / Flickr user Yodal Anecdotal

(MoneyWatch) COMMENTARY Yahoo's (YHOO) at it again. This time, activist investor Dan Loeb and the entire tech world, according to Ben Parr over at CNET, want the head of Yahoo CEO Scott Thompson. To be more specific, they want him out. Loeb wants him out by today. The tech industry hasn't been that specific.

But why? I mean, why in the world are all these people after Thompson, a man who everyone seems to think is such a nice guy? Parr says the tech industry is after him for starting a patent war with Facebook. Personally, I think Facebook and its $100 billion valuation can take care of itself. But that's just me.

The real problem is that it appears as if Thompson lied about having a degree in computer science. He doesn't. Unfortunately, Yahoo's SEC filings and website say he does. So does the website of Ignite Venture partners, where Thompson's an advisor. And so did eBay's website when Thompson ran the PayPal division there.

"Oopsy," as Chelsea Handler would say.

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But let's get serious here, for a moment. After all, here's a public company with thousands of employees and shareholders trying desperately to turn itself around -- or at least to do something right -- after years and years of mismanagement. Not to mention a guy's job on the line. And I seriously doubt eBay would take him back now. I wouldn't, that's for sure.

First, let's look at the discrepancy in Thompson's bio or what I like to call his "resume malfunction." There are only two possible ways that degree could have ended up in at least four different places over a five or six year period:

Years ago, some mysterious person for some unknown reason added the degree to Thompson's bio and he somehow never noticed or for whatever reason, failed to correct it.

At some point in his career, Thompson made the degree up. He lied.

Now, I happen to subscribe to Occam's Razor which essentially says that, all things being equal, the simplest explanation is the right one. I also happen to live in the real world where monkeys can't fly and, as I find myself saying all-too-often these days, if it looks like a duck, walks like a duck and quacks like a duck, chances are you're looking at a duck.

So let's just assume for the sake of argument that the guy lied. Should he be fired?

I think so, and for three very good reasons: It's unethical; it's fraudulent (the SEC filing part); and it destroys the leader of a public company's credibility with employees, shareholders and customers.

That said, this kind of thing has happened before and the outcome hasn't always been the same.

Back in 2009, the board of directors of Microsemi -- also a public technology company -- found that their CEO, James Peterson, lied about having two degrees from Brigham Young University. Not only that, but when the accusation was initially made by a whistle-blower website, Peterson denied it in a company press release.

Peterson is still Microsemi's CEO, earning over $13 million over the three years since the scandal emerged.

In sharp contrast, when Broadcom discovered that senior vice president Vahid Manian had similarly fabricated two degrees from the University of California at Irvine, they fired him. On the other hand, Manian was subsequently hired as a senior VP at Telegent Systems, a startup that since fell apart and was acquired for peanuts.

Just for kicks, I asked two people whose opinions I trust if they thought Thompson should be fired. One said, without hesitation, "I'd fire him in a heartbeat."

The other said, "No. Yahoo's executive management and board have been hopelessly incompetent for years. This is minor compared to their history of screw-ups. They should claim they are obviously incompetent so nobody should expect much."

I could be wrong, but the second guy's response sounds just a little bit sarcastic, don't you think?

So I'm putting the question to you. Assuming he indeed lied about the degree, should Thompson be fired? How about the board directors responsible for hiring him? Better respond soon, Loeb wants his answer today.

Image courtesy Flickr user Yodal Anecdotal

[[e-mail]]

He must be fired, there is no excuse for this much of a lie. In addition, the head of HR needs to be fired for not conducting a thorough background investigation. Companies spend thousands of dollars tracking down junior people. The CEO must be held to the highest level of conduct expected of the most junior person.

[janalips78]

He could have taken several classes in computer science and never finsished the degree. Maybe he went to another college took computer science courses and didn't transfer over and he thought he had a computer science degree in his mind. I wouldn't fire him based on they couldn't acknowledge him having a computer science degree. If he has an accounting degree with a minor in computer science it shouldn't be a big deal. Maybe he is so busy trying to make the companies money he worked for he didn't realize that someone made a mistake on his bio. Most CEO's at large corporations are worried about making the company profit that the last thing on their mind is how accurate their bio is. I don't think its a big deal! I think ppl like to blow things out of proportion. Is Obama really from the United States? He is still running for President. Ppl like Martha Stewart who got into trouble years ago for insider trading is still running her companies. I don't think its a big deal!

[stobak2]

Warren Buffett chimed in on CNBC:

" It doesn't sound like an inadvertent error. If I thought as a director, if I thought that an officer had consistently misstated some fact to me, I think I'd probably do something about it. ... We had something like that one time. If you can't trust the people you're working with, you've got a problem."

ST

[averagetoby]

If Scott would lie about something so simple as this, what other lies has he told or will he tell? What will Scott do when he has even more difficult decisions to make as a CEO? How many other poor decisions has he made in his career that were not based on truth. As a CEO, he needs to be the moral compass for the organization. Choosing to use a "questionable" accounting treatment or making decisions that can impact shareholders or employees that require a ethical leader, should not be gambled with. How many other lies has he told to get where he is today? The board and his shareholders shouldn't compromise. We need stronger leaders. We need to get more balance back in the leadership ranks, where they can make the tough decisions and do so ethically. How many more CEO's do we need that follow the "Wink Wink...Nod Nod" approach of leadership?

[Patsausib]

This is insane--yes he lied, and shouldn't have, but he has experience and accomplishments beyond his education.

It's at most a mea culpa, drop pants and flogged 10 times in public; a personal humiliation--throw pie at his face in the cafeteria, and then let it go at that.

Politicians lie all the time, and so do corporates, so why make such a BFD about it. Focus on what he plans to do for Yahoo and what he has done. This is like the presidential election--crazy witch-hunting. If Mitt Romney and Obama can get away with lies, why not this bloke?

[hungry_student]

granted - politicians lie...but CEOs are a better breed of individuals. This is due to a great responsibility of steering the entire organization to become a lucrative company and to satisfy the prime directive - to increase investor profits. This great responsibility entails having been taught with structured instruction from an accredited business school.
Thompson's termination is the right decision, although embarrasing it was, but it showed that new business school graduates have better opportunities in acquiring C-level positions and be unafraid of termination due to inadequate educational attainment.

[jedelman1100]

In general, I would agree that resume fraud should be cause for dismissal. However, you always need to look at the context and the total assumed cost of making a decision either way. In this instance, if the Board of Yahoo feels that they can salvage Thompson's reputation with the company and with shareholders and if Thompson is up for the effort needed to do this, then I'd say at least consider that option. Because this company is already at or near the bottom in terms of credibility.

Look at it this way: who can they get as a replacement who is clearly better than who they have now? If the answer is "no one" (and I suspect that's true), then suck it up and go into damage control mode. Cut his bonus opportunity, reduce his stock options, and have him do a mea culpa and move on with conducting the business of the company. Because the alternative looks a lot worse to me.