What's the takeaway from Yahoo's recent CEO fiasco? Don't lie on your corporate bio, for one, and make sure no one else has lied on your behalf. But the real lesson has nothing to do with falsified credentials.
Sure, the world will remember Scott Thompson as the Yahoo CEO who got fired over a fake computer science degree, but the context is crucial: A battle with Yahoo shareholder Dan Loeb for control of the company. If not for Loeb, we may never have found out about Thompson's juiced resume, and he might still be CEO. The real lesson is: Beware the activist investor.
Four months had passed since Thompson's appointment as Yahoo CEO, and no one had questioned his education. His relevant experience at PayPal? Sure, at first. But not his computer science degree. In fact, many of us actually thought that especially qualified him for the Yahoo job.
In hindsight, Yahoo obviously should have investigated Thompson's background more thoroughly. (And shame on us in the press for missing this one!) But even if Yahoo had found the discrepancy after Thompson was named CEO, it might have quietly corrected the mistake and hoped no one noticed.
It is possible to survive a scandal over a college degree you wish you'd earned but didn't. When RadioShack CEO David Edmondson resigned in 2006 after a newspaper reported that his two supposed degrees were invented and that he was facing a trial for DUI charges, the company said its board had known about “some, but definitely not all” of the issues. (I suppose it makes a difference which ones.) But former Bausch & Lomb CEO Ronald Zarrella stayed around for years after he was busted for falsely claiming an MBA from New York University.
In this case, there was no pushing anything under the rug. it was Loeb himself who outed Thompson, in a letter to Yahoo's board that he made public in a press release.
"According to the Yahoo! Form 10-K/A, filed with the Securities and Exchange Commission on April 27, 2012, newly-hired Chief Executive Officer, Scott Thompson, 'holds a Bachelor's degree in accounting and computer science' from Stonehill College," it read. "A rudimentary Google search reveals a Stonehill College alumni announcement stating that Mr. Thompson's degree is in accounting only." Whoops.
Did Loeb actually care about Thompson's level of educational attainment? Probably not. This was a power play, pure and simple. And it worked. (Note that Loeb's activist website, ValueYahoo, is already taken down.) If Loeb hadn't hit the jackpot with the degree accusation - or if Thompson and Yahoo successfully brushed it off - he would have come back, again and again, until either he or his adversary crumbled.
But with the mess Yahoo is in - even after Thompson's four months on the job - Loeb finally had the mob on his side. And now he's on top.