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The board's role in hiring senior executives

Tom Fox | April 4, 2018

What is the role of a board of directors in hiring senior executives, chief compliance officers, and even other board members? The hiring of a bad senior-executive hire can cost a company much more than simply dollars, particularly in the current hyper-sensitive social media environment. Both fiduciary risk and exposure for the board of directors cannot be overlooked.

Consider the example of Yahoo and its hiring of Scott Thompson in 2012. It turned out that Thompson had incorrect information on his online biography regarding his academic credentials. The key is for a company to engage in an executive due diligence investigation, rather than simply a routine or even executive-level background investigation.

Conversely, executive due diligence should consider all available public records, including criminal history, civil litigation issues, financial and legal issues, relationships with other companies and board advisory positions, reputation, misrepresented education...

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