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The boards at many public companies today are failing their shareholders by making weak decisions in order to minimize negative publicity or lawsuits instead of putting their energies toward driving real growth.
The latest case in point: Yahoo! (YHOO). The troubled company has stumbled along with a revolving door of poor CEO choices—founder Jerry Yang and Autodesk’s (ADSK) Carol Bartz—that have lacked a vision or a plan for turning it around.
In January the board hired former PayPal (EBAY) President Scott Thompson as its new CEO. In his first four months, Thompson made some bold moves, laying off 2,000 employees (14 percent of the company’s workforce) and announcing plans to sell off most of Yahoo’s Alibaba stake and about 50 other services.
It’s not clear if Thompson is the answer, but unlike his predecessors, at least he has a plan and is trying to right the ship. That was until he was hit with “Résumé-gate.”
Now the Yahoo board is considering firing Thompson—not because he is doing a bad job, but because of an inaccuracy on his résumé. It turns out Thompson’s undergraduate degree from tiny Stonehill College in Boston 30 years ago was in accounting. In Yahoo’s Securities and Exchange Commission filing, however, it was listed as a degree in computer science and accounting.
Third Point Capital, which holds a 5.8 percent stake in Yahoo, has been trying to get its own handpicked management team named as a replacement because it doesn’t agree with the company’s strategy. Third Point has been working furiously to pump up Résumé-gate, painting Thompson as a liar who falsified his CV to get the job.
Meanwhile, Third Point is busy putting pressure on the Yahoo board to fire Thompson because, they contend, he got the job under false pretenses and obviously must not be a fit.
The only problem with this story is that the undergraduate college education of a CEO who has been in the business world for 30 years is of no significance whatsoever in deciding whether he can do the job. On its own, a diploma in computer science doesn’t qualify you to be the CEO of a tech company.
What did qualify Thompson was his tenure as president and chief technology officer of Paypal. Before that he was a senior executive of technology at Visa’s consumer payment processor Inovant.
This would all be very entertaining if it weren’t for the fact that Yahoo’s board flinched the other day. Caving to the pressure, they formed a special committee to investigate Thompson’s résumé. Apparently this group now needs to spend days, weeks, perhaps even months evaluating whether Thompson is still fit to be Yahoo’s CEO.
This is a ridiculous waste of time and effort. If anyone should be booted, it’s the Yahoo board for incompetence. (The director in charge of the CEO search that hired Thompson, Patti Hart, has announced she will not seek reelection to the board.)
Successful companies need strong leaders and boards. Let’s hope the Yahoo board has the courage to stand up to bullying by the dissidents and not fire its CEO over a minor technicality.