It may only take a few weeks to find out how many senior executives at America’s large public companies have misleading claims in their resumes. There have to be some. The backgrounds of the top five or ten managers at many corporations will be reviewed by boards that have been made anxious by Yahoo!’s (NASDAQ: YHOO) CEO debacle. That means as many as 5,000 background checks, just among the S&P 500. It is wishful thinking to believe that everyone will pass a strict test. A measure of the boards is how they handle any executives, or board members, who have mislead their companies.
The first choice boards must make will depend on the extent of the misleading claims. It is one thing to make a false statement about a degree. It is another for someone to claim that he or she played a varsity sport or was a member of a chess club. Boards would be wise to excuse the latter type of “error” with a reprimand, and probably a pubic disclosure. This might ruin the chances that the executive involved will ever find work equivalent to what he or she has. Of course, that tethers the manager more closely to the current employer, an unintended but probably positive consequence.
The second set of circumstances are similar to those confronted by the Yahoo! board. The claim by Scott Thomson about his computer science degree was a lie he apparently believed would allow him to qualify for more jobs than he might have otherwise. Boards who find this kind of problem will need to look for a way to replace an executive very quickly while pushing the offending one out the door. Better the board finds the error than a shareholder or the SEC. The board still will face severe criticism, but it can say it policed its own corporation.
Another, and in many cases most problematic, case is one in which a board member is the liar. Yahoo!’s board faced this with Patti Hart. She could be forced to resign without too much scrutiny. The scandal over Thompson provides some cover. But she is not the last board member of a large American company who has overstated her qualifications.
Many boards at big public companies certainly have started to vet the CVs of their own members and senior managements. When a lie is uncovered, the board may be measured for a long time based on how it handles the problem.
Douglas A. McIntyre