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Shame on Yahoo CEO, Bigger Shame on Yahoo Board

Stocks in this article: YHOO

I can't give you a brain, but I can give you a diploma.
L. Frank Baum (from The Wizard of Oz)

NEW YORK ( TheStreet) -- It seems boards must do a better job of due diligence when they search for a CEO.

PayPal didn't, and got by.

Scott Thompson went from PayPal President to Yahoo! CEO with an erroneous resume.

Yahoo (YHOO) didn't, and got caught.

And it was over the same guy, CEO Scott Thompson.

While Thompson now acknowledges he did not get a computer science degree from Stonehill College, as his resume claims, the board has formed a committee to investigate.

Hello -- the nomination/CEO search committee should have investigated a CEO candidate before extending an offer to Thompson.

All right, before you "It's no big deal, he's a good CEO" gang weighs in, let's agree to consider it a huge red flag every time and anytime a person lies. In doing to they self-sabotage further trust.

Listen, we all embellish treasured stories over time.

The problem is that we pay super salaries, and grant super powers, to CEOs and expect them to be extra human and as close to flawless as possible. Shouldn't they at least be trustworthy in stating their background credentials? If not, how can they be trusted to execute deals, strategies and other high-priority responsibilities?

The situation regarding Thompson's education came to light a couple of weeks ago when activist investor Dan Loeb and his hedge fund firm, Third Point, pointed out the false credential.

Yahoo's board said it would review the matter and "make an appropriate disclosure to shareholders." The company had earlier called the discrepancy an "inadvertent error" and said it "in no way alters that fact that Mr. Thompson is a highly qualified executive with a successful track record leading large consumer technology companies."

Maybe an undergrad degree isn't a big deal, but lying about it is. If you can't be trusted in little things, how can you be trusted in big things?

"Trust, but verify" was a signature phrase adopted and made famous by President Ronald Reagan, who used it when discussing U.S. relations with the Soviet Union. Sounds like a maxim also worthy of board governance, at least in vetting a CEO.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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