In a recent example of the need for businesses to conduct education verifications during background checks, the newly hired Chief Executive Officer of Yahoo!, Scott Thompson, was found to have discrepancies in his educational record after a letter from Third Point LLC, owners of close to 6 percent of Yahoo! shares, pointed out that while numerous biographies and securities filings claimed Thompson held a Bachelor’s degree in accounting and computer science, a “rudimentary Google search” revealed that his degree was in accounting only. The letter is available here: Third Point letter to Yahoo! (UPDATE: Yahoo! Board of Directors Forms Special Committee to Review CEO Academic Credentials).
The letter from Daniel S. Loeb, Chief Executive Officer of Third Point LLC, to the Yahoo! Board of Directors stated that:
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. This assertion was repeated in the Company’s draft proxy statement, also filed with the SEC on April 27, 2012, as well as on the Company’s website (http://pressroom.yahoo.net/pr/ycorp/scott-thompson.aspx).
Shareholders must also question how the Board of Directors, specifically the Search Committee chaired by Ms. Patti Hart, could permit the Company to hire a CEO with this discrepancy in the public record. We assumed previously that the Committee would have conducted a thorough background check on Mr. Thompson – and even if not thorough, the most basic of such checks would address Mr. Thompson’s education and degrees. Should our concerns about Mr. Thompson’s record be accurate, that would call into serious question whether the Board failed to exercise appropriate diligence and oversight in one of its most fundamental tasks – identifying and hiring the Chief Executive Officer.
While checking on Thompson’s academic credentials, the letter indicated that Third Point LLC also “discovered another apparent discrepancy regarding the academic background of Ms. Hart”:
Specifically, Ms. Hart, we are told in various corporate filings (including the aforementioned Form 10-K/A), holds a “Bachelor’s degree in marketing and economics” from Illinois State University. However, we understand that Ms. Hart’s degree is in Business Administration. She received a degree in neither Marketing nor Economics, (although we understand that she may have taken a small number of courses – not enough for even a minor degree – in each).
The letter then referred to page 13 of the Yahoo! Code of Ethics that relates to Accurate Business Communications, Records and Contracts and sets forth a standard of conduct that “applies to all Yahoo! employees (including officers… and directors…),” which states:
“Disclosure in reports and documents filed with or submitted to the U.S. Securities and Exchange Commission and in other public communications made by Yahoo! must be full, fair, accurate, timely and understandable…. Make sure information we disclose about our company is clear, truthful and accurate.”
After Yahoo!, a multinational internet corporation headquartered in Sunnyvale, CA, issued an initial response saying that Thompson did not earn a degree in computer science and cited an “inadvertent error” for the inaccurate SEC filings and website biographies, Third Point LLC sent a follow up letter to the Yahoo! Board of Directors calling the response “inadequate” and demanding action on the matter by May 7. The follow up letter is available here: Third Point follow up letter.
Yahoo! revised the online biography of CEO Thompson but a cached version showing the former inaccuracy in academic credentials is available here: here. In addition, a 2009 radio interview has been unearthed where the Yahoo! CEO does not correct an interviewer who mentions that he has a computer science degree. The audio is available here.
Although it is not yet known if Thompson misrepresented his academic record on his job application to Yahoo!, resume’ inflation in the highly competitive job market during the recent economic downturn is not uncommon. A 2009 white paper from payroll and HR outsourcing firm ADP ‘Should Employers Consider Outsourcing Background Checks?’ found that 46 percent of employment, education, and/or reference checks turned up discrepancies. The white paper is available here.
However, a 2010 survey from the Society for Human Resource Management (SHRM) ‘Conducting Reference Background Checks’ revealed that while more than three out of four businesses polled – 76 percent – conducted general reference checks on all job candidates, less than half – 49 percent – always verified the degrees claimed by job applicants. The SHRM survey is available here.
For more information on how employers can verify the academic achievements of job applicants, read the article ‘The Basics of Education Verifications’ by Attorney Lester Rosen, founder and CEO of Employment Screening Resources (ESR) and author of ‘The Safe Hiring Manual,’ which is available at http://www.esrcheck.com/wordpress/2009/12/16/the-basics-of-education-verifications/.
For more information on pre-employment background checks as part of a Safe Hiring Program, visit Employment Screening Resources (ESR) – ‘The Background Check Authority’ and nationwide background screening firm accredited by the National Association of Professional Background Screeners (NAPBS®) – at http://www.esrcheck.com/ or call ESR at 415.898.0044.
About Employment Screening Resources (ESR):
Employment Screening Resources (ESR) – ‘The Background Check AuthoritySM’– provides accurate and actionable information, empowering employers to make informed safe hiring decisions for the benefit for our clients, their employees, and the public. ESR literally wrote the book on background screening with “The Safe Hiring Manual” by Founder and CEO Lester Rosen. ESR is accredited by The National Association of Professional Background Screeners (NAPBS), a distinction held by a small percentage of screening firms. By choosing an accredited screening firm like ESR, employers know they have selected an agency that meets the highest industry standards. For more information about Employment Screening Resources (ESR), visit http://www.esrcheck.com/ or call 415.898.0044 or 888.999.4474.
About ESR News:
The Employment Screening Resources (ESR) News blog – ESR News – provides employment screening information for employers, recruiters, and jobseekers on a variety of topics including credit reports, criminal records, data privacy, discrimination, E-Verify, jobs reports, legal updates, negligent hiring, workplace violence, and use of search engines and social network sites for background checks. For more information about ESR News or to send comments or questions, please email ESR News Editor Thomas Ahearn at firstname.lastname@example.org.