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This year I introduced a weekly series called "CEO Gaffe of the Week." Having come across more than a handful of questionable executive decisions last year when compiling my list of the worst CEOs of 2011, I thought it could be a learning experience for all of us if I pointed out apparent gaffes as they occur. Trusting your investments begins with trusting the leadership at the top -- and with leaders like these on your side, sometimes you don't need enemies!
Today I want to highlight the former CEO of Yahoo! (Nasdaq: YHOO ) , Scott Thompson.
The dunce cap
Never has a regular weekly series subhead been so foretelling.
Last Friday, just hours after ripping into Spirit Airlines' CEO for his obscenely high baggage fees, Yahoo! CEO Scott Thompson came under heavy fire for apparent "errors" on his resume.
These errors, first pointed out by activist shareholder group Third Point, alleged that Thompson did not indeed have degrees in computer science and accounting from Stonehill College, as his resume had stated. Their contention was that he held only an accounting degree. It was later confirmed by tech blog AllThingsD later that day that these allegations were indeed true.
In response to the backlash by Third Point and other activists calling for the immediate firing of Thompson, Yahoo!'s board launched an independent investigation into the matter and Thompson released the following statement before stepping down as CEO over the weekend:
I want you to know how deeply I regret how this issue has affected the company and all of you. We have all been working very hard to move the company forward, and this has had the opposite effect. For that, I take full responsibility, and I want to apologize to you.
Sincere, frank, and to the point. But don't think this won over any hearts, because there's more to Thompson's resume-padding story than meets the eye.
To the corner Mr. Thompson
But wait -- there's more!
Again, how foreboding of a subhead, right? Things shifted from bad to worse when CNNMoney pointed out that these "inadvertent resume errors" predate his tenure as Yahoo!'s CEO. When Thompson was president of PayPal, the highly profitable subsidiary of eBay (Nasdaq: EBAY ) , he listed a computer science degree in his online biographical information. Did the gremlins hack his computer again? Highly unlikely, methinks!
To add even more confusion to the subject, Thompson, who also serves as a board member for F5 Networks (Nasdaq: FFIV ) , has his education information correct in both its regulatory filings and in eBay's regulatory filings with the Securities and Exchange Commission.
Although Thompson chose to step down over the weekend after disclosing to the board his battle with thyroid cancer (which, may I add, I wish Thompson a speedy recovery), why should Thompson have been treated so differently when it was brutally apparent that he knowingly misrepresented himself on Yahoo!'s financial statements filed with the SEC?
Yahoo! hasn't had an easy go of things in the past decade. Google (Nasdaq: GOOG ) forcibly took a lion's share of the search market away from Yahoo! while even Microsoft's (Nasdaq: MSFT ) Bing search engine has crept up to unseat Yahoo! for the No. 2 spot. Furthermore, Yahoo!'s attempts to turn around its aching business have lacked innovation and have been far behind those of its peers. Even its most recent attempt to focus on mobile applications isn't anything we haven't heard before.
With the company's stake in Alibaba.com being the one of the more attractive assets Yahoo! possesses, and shareholders losing what little faith there existed in Yahoo!'s management in the first place, it's going to be difficult not to include Scott Thompson in the discussion for CEO Gaffe of the Year.
Do you have a CEO you'd like to nominate for this dubious honor? Shoot me an email and a one- or two-sentence description of why your choice deserves next week's nomination, and you just may wind up seeing your nominee in the spotlight.
If you'd like a surefire way to avoid investing in companies with questionable leadership practices, I invite you to download a copy of our latest special report: "Secure Your Future With 9 Rock-Solid Dividend Stocks." This report contains a wide array of companies and sectors that are likely to keep your best interests in mind, regardless of whether the market is up or down. Best of all, it's completely free for a limited time, so don't miss out!