There have been several recent cases of a CEO or CFO resigning or being ousted for misrepresenting academic credentials. For instance, during February 2006, the CEO of RadioShack resigned by mutual agreement for inflating his educational background. During 2002, Veritas Software Corporations DFO resigned after claiming to have an MBA from Stanford University. On the other hand, Bausch & Lomb Inc.s board refused the CEOs offer to resign following a questionable claim to have an MBA.

Suppose you have been retained by the board of a company where the CEO has overstated credentials. This company has a code of ethics and conduct which states that the employee should always do the right thing.

(a) What is the board of directors responsibility in such matters?

(b) What arguments would you make to ask the CEO to resign? What damage might be caused if the decision is made to retain the current CEO?