CEO Scandal: A Computer Science Degree Is a Big Deal at Yahoo

Scott ThompsonA throwaway line in a CEO's bio may cost him his job, and it has already apparently ended the gig for the person that hired him.

Reports on Tuesday indicate that Patti Hart -- the Yahoo (YHOO) board member in charge of finding a new CEO at the Internet giant -- will not stand for reelection at the company's next annual meeting, essentially resigning from the board of directors.

It was Hart who oversaw the hiring process after Carol Bartz was dismissed last year. The market seemed to initially like the company's choice of Scott Thompson as the new CEO in January, even if it diminished the chances of an outright sale of the company that speculators were hoping for.

Liar's Poker

Thompson headed up eBay's (EBAY) fast-growing PayPal division, making him a logical choice for an Internet pioneer that was rich in traffic but poor in top-line growth. Thompson rolled up his sleeves, and quickly made a few operating tweaks to the company.

Then came Third Point's Dan Loeb, an activist investor who did a little digging on Thompson and unearthed a deceitful gem. Thompson's bio claims that he received both an accounting and a computer science degree from Stonehill College. It turns out that the school didn't even offer a computer science degree until after Thompson had graduated.

Yahoo claimed that it was an "inadvertent error" last week, but that didn't sit well with investors. It was at worst a lie on Thompson's behalf and at best a failure of Hart's vetting process. Loeb's original report claims that Thompson was listed as having a computer science degree on some representations at eBay, though it never appeared in any official SEC filings.

Will Hart agreeing to step down be enough to satisfy investors? Yahoo has plenty of problems to tackle without this distraction.

One Degree of Separation

Obviously Thompson wasn't brought in because of a bogus degree. He rose up the ranks at PayPal and aced his interviews with Yahoo on his own.

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What may have been an innocent act to gain street cred with PayPal and Yahoo engineers who may have looked down on an accountant has snowballed out of control. It's not really about Thompson having the degree or not. Now it's a matter of credibility. Can Thompson regain that?

Credibility may have been at the heart of Hart's decision not to renew her term on the beleaguered company's board. She's CEO at slot machine maker International Game Technology (IGT). Being at the center of an activist attack would reflect poorly on her judgment call. It also would have been embarrassing if shareholders had voted her out at the next annual investor meeting.

Now Yahoo's board will have to decide how Thompson will pay for the unfortunate oversight. If Yahoo doesn't decide, you can be sure that flustered shareholders will let the company know what they think the dot-com behemoth should do.

Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Yahoo. Motley Fool newsletter services have recommended buying shares of eBay and Yahoo.

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