Scott Thompson vs Yahoo, Inc.: Fraudulent Resume (2012)

Controversy

Yahoo! Inc. logo

2012 was the year of the CEO for Yahoo, Inc. The company had two CEOs, Scott Thompson and Marissa Mayer. The question is why. A scandal caused the shift in power from Thompson to Mayer. It was released that Thompson’s résumé that was submitted to the SEC (Securities and Exchange Commission) and to the Yahoo Board of Directors contained information that was not true. It appeared as though Thompson falsified his résumé to claim he had a degree in computer science because it was discovered that Thompson only has a degree in accounting from a college near Boston (Carlson). How did this seemingly small error cause a scandal at the company when Thompson had made a successful career as a high level executive for other companies?
A Yahoo, Inc. shareholder began his own investigation of Thompson.  When confronted about the issue Thompson had not done anything to clear up the issue or attempt to alert the public or shareholders of the issue.  As a result of his actions along with the moral conflict from Yahoo employees, Thompson was asked to resign by the Board of Directors.  His resignation did not appear to come as a result of the scandal but due to issues with his health.

Stakeholders

Stakeholders involved in the scandal include Yahoo, Inc. employees, shareholders, and other potential candidates for the Yahoo, Inc. CEO position.  The employees, who began to distrust their CEO Scott Thompson, also had internal moral conflicts about working for a man who added false information to his résumé to get his job which made many employee unhappy and embarrassed to work for the company.  The shareholders were affected because they entrusted the Board of Directors to choose the best CEO for the company, which to many shareholders who value honesty, would not have been Scott Thompson.  Other potential candidates for the Yahoo, Inc. CEO position were affected because they were most likely honest on their résumés and might have had the same if not more qualifications for the job but a dishonest Scott Thompson was hired instead as a result of his embellished résumé.

Individualism

Yahoo's Scott Thompson and Marissa Mayer

The Theory of Individualism was created by Michael Friedman.  It claims that a business’ only goal is to maximize the business’ profits (Salazar).  One can say that Yahoo failed at doing this by not conducting a more thorough investigation of Thompson’s résumé.  By doing this before hiring him as the CEO, the company would not have appeared shaky and not trustable especially during a period where the company was already having competition issues with Google and Facebook (Stewart).  By hiring a credible, honest, and competent CEO Yahoo, Inc. would have been able to keep employees happy which in turn affects the profitability of the company.  If Yahoo wanted to keep Thompson despite the résumé issue, the Board of Directors should have made him publicly rectify the issue to acknowledge the shareholders and the public.  This would have shown that he could be trusted.  The manner in which the scandal was handled did not maximize profits.  This can be seen from the decreasing Yahoo stock prices during the first few weeks of May when the scandal ensued.  The stock fell from trading at $15.77 on May 2^nd, the day before the scandal, to $15.19 on May 11^th, the last day that Thompson was in office ("YHOO Historical Prices | Yahoo! Inc. Stock - Yahoo! Finance.").

Utilitarianism

The theory of utilitarianism states that happiness is the only thing that is of real value (Salazar).  This scandal questions whose happiness is to be valued the most.  Is it the happiness of Scott Thompson or the happiness of Yahoo’s shareholders?  Utilitarianism is an ethical tradition that directs us to make decisions based on the overall consequences of our acts (DesJardins 24).  Scott Thompson made the decision to falsify his résumé in order to obtain the position of CEO for Yahoo, Inc.   To him, this decision was necessary to achieve happiness because of getting the job that he wanted.  The happiness of the employees and shareholders was taken into account when Thompson was asked to come clean about the issue and ultimately asked to leave his position at the company.  Yahoo, Inc. took the happiness of the stakeholders into account and subsequently hired a more trustworthy and competent CEO to run the company.

Kantianism

Yahoo! Inc. headquarters in Sunnyvale, CA

The Kantian theory states that “people should be treated as ends and not as means” (DesJardins 38).  It appears that Thompson used the Board of Directors as a means of obtaining his position of CEO.  By submitting a résumé with false but possibly crucial information, Thompson lied to the Yahoo Board of Directors and the SEC.  Yahoo, Inc. is also guilty of using Thompson as a means and not as an end.  Whether the company wishes to acknowledge it or not, they hired Thompson to make Yahoo more successful against its competitors.  Based on Thompson’s résumé and his past success with PayPal and Ebay, the Board of Directors wanted him to work magic for Yahoo.

Virtue Theory

The virtue theory consists of four basic virtues:  courage, honesty, temperance/ self-control, and justice/fairness (Salazar).  In this case, Scott Thompson displayed courage by not wanting to resign due to the scandal or his health issue of thyroid cancer (Stewart).  Thompson doesn't exhibit the honesty virtue.  His résumé containing false information was given to Yahoo and PayPal as well (Pepitone).  Yahoo, Inc. does show honesty because the issue was released to the shareholders and the public despite it being bad publicity.  Thompson did not display self-control by supplying a falsified résumé to the Yahoo Board of Directors and the SEC in order to get the job that he wanted.  Justice/ Fairness is seen from Yahoo, Inc. because they got rid of Thompson as a result of the scandal and hired Marissa Mayer as the new CEO.

References

Carlson, Nicholas. "Scott Thompson Resume Scandal Is Not 'An Inadvertent Mistake' - He Also Claimed Comp Sci Degree As CTO Of PayPal." Business Insider. Business Insider, Inc, 3 May 2012. Web. 2 Apr. 2014. <http://www.businessinsider.com/here-is-scott-thompsons-paypal-bio-2012-5>.

DesJardins, Joseph R. An Introduction to Business Ethics. New York, NY: McGraw-Hill/Irwin, 2014. Print.

"List of Public Companies Worldwide, Letter  - Businessweek - Businessweek." Businessweek.com. N.p., n.d. Web. 2 Apr. 2014. <http://investing.businessweek.com/research/stocks/people/person.asp?personId=20480823&ticker=EBAY>.

Pepitone, Julianne. "Yahoo CEO Scott Thompson out after resume scandal." CNNMoney. Cable News Network, 13 May 2012. Web. 2 Apr. 2014. <http://money.cnn.com/2012/05/13/technology/yahoo-ceo-out/>.

Powerpoint Presentations by Heather Salazar

Stewart, James. "In the Undoing of a C.E.O., a Puzzle." The New York Times. The New York Times, 18 May 2012. Web. 2 Apr. 2014. <http://www.nytimes.com/2012/05/19/business/the-undoing-of-scott-thompson-at-yahoo-common-sense.html?pagewanted=all&_r=0>.

"YHOO Historical Prices | Yahoo! Inc. Stock - Yahoo! Finance." YHOO Historical Prices | Yahoo! Inc. Stock - Yahoo! Finance. N.p., n.d. Web. 2 Apr. 2014. <http://finance.yahoo.com/q/hp?s=YHOO&a=04&b=2&c=2012&d=04&e=14&f=2012&g=d>.