CEOs stumble over ethics violations, mismanagement
— -- Yahoo CEO Scott Thompson lasted just four months before revelations of résumé padding forced him to resign over the weekend.
Best Buy Chairman and founder Richard Schulze exited Monday after directors determined he used poor judgment for failing to disclose CEO Brian Dunn's personal relationship with a young subordinate, a violation of company ethics that led to Dunn's departure last month.
And JPMorgan Chase CEO Jamie Dimon is under fire after the investment bank's $2.3 billion trading blunder that's already cost a key deputy her job.
Most corporate executives aren't on the endangered species list and probably never will be. But increasingly, their personal and professional decisions are placing them in the cross hairs of angry shareholders, opportunistic hedge funds, disgruntled employees and even their own boards of directors — making the imperious CEO far more vulnerable to personal, public and corporate missteps than ever before.
"Certainly, anybody who is doing something that can be construed as unethical, immoral or greedy is being taken to task," says Paul Dorf of Compensation Resources, a consultant to boards of directors.
Ethical lapses such as extramarital affairs and résumé padding were part of Corporate America's dark underbelly long before the anything-goes era portrayed on TV's Mad Men, but lies and embellishments are no longer tolerated. Neither, it seems, are cozy arrangements like those of Chesapeake Energy's CEO Aubrey McClendon, who profited handsomely from personal stakes in company wells as part of his board-approved compensation package until he agreed to end the arrangement under pressure last week.
Excessive compensation packages are getting blowback from investors. In a rare advisory vote, Citigroup shareholders recently rejected a large compensation package for CEO Vikram Pandit. Other CEOs, including Avon Products' Andrea Jung, have been forced out — or up to a figurehead role — in the wake of poor performance.
What gives?
Corporate governance experts, board consultants and ethics experts say CEOs are under more hot-seat scrutiny for several reasons. Despite record corporate profits, unemployment remains stubbornly high. Excessive CEO compensation and inequities in pay and benefits have gained wide exposure by social movements such as Occupy Wall Street and out-of-work military veterans fresh off protracted tours in Iraq and Afghanistan.
Social media and business-centric websites such as glassdoor.com and vault.com have also spread fact — and rumor — about the inside dealings of Corporate America, revealing ethical breaches and internal business practices that may never have surfaced before the Internet and a 24/7 media culture.
"God forbid anyone who isn't squeaky-clean these days or misrepresents their credentials at the top of the company," says Wendy Patrick, who teaches business ethics at San Diego State University. "Anything embarrassing and you begin to question everything. If they aren't making good decisions in their personal lives, it can bleed over to the way they run their companies."
In the post-Enron era of corporate meltdowns, companies are required to disclose more information that's easily dispersed on the Internet.
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