When Leaders Go Bad: The Highs and Lows of Ethical Misconduct
Inappropriate behavior, such as workplace flings, alcohol-fueled parties and sexist and racist remarks can be risky business. Recent scandals involving the resignations of high-profile CEOs, combined with Rolling Stone co-founder Jann Wenner's controversial remarks, emphasize the need for a separation between corporate and public spheres.
After more than three decades, Bernard Loony, CEO of BP, was abruptly pushed out last Wednesday [September 13th] for concealing undisclosed personal relationships with colleagues. The British oil giant immediately lost $2 billion in market value and fell a couple of notches in shareholder eyes. As its shares plummeted in the wake of the revelations, it dragged down the FTSE 100, dealing a huge blow to UK pension funds. Once the British tabloids got wind of the scandal, more dirt sprang up surrounding his alleged liaisons, further stoking disappointed shareholders and the disenchanted public. Now, the BP board is investigating fresh allegations made years ago that perhaps the board turned a blind eye to, as it considers millions of dollars in claw backs to appease stakeholders.
Another impropriety emerged this past Tuesday [September 20th], when Cboe Global Markets, Inc. (Cboe: CBOE), the world's leading derivatives and securities exchange network, announced that its CEO Edward Tilly was stepping down after concealing personal relationships at the firm. Shares in the company surged and closed at a record high, prompting rumors Cboe could be a possible acquisition target now that Tilly, after 36 years at the exchange, had resigned. The exit came after an investigation by the board and outside independent counsel in late August.
This September has been marked by an unusually high number of important men running afoul of ethical conduct. Before these two high profile exits, the board of CS DISCO announced on September 11th its founder and CEO, Harvard prodigy Kiwi Camara would step down following accusations of sexual assault made by a female employee at a company dinner. After his departure, CS DISCO’s stock jumped 10%.
As it turns out, these resignations are just the latest in a series of surprise CEO exits prompted by questionable personal conduct in the workplace. In BP’s and CS DISCO’s case, there were allegedly ongoing complaints that were seemingly ignored or swept under the carpet. Whereas in the Cboe case, the allegations were promptly investigated with outside counsel, and found to contradict the company's core policies and corporate values.
The latest scandals involving male CEOs acting improperly at work serves as a stark reminder that there is substantial risk involved in mixing personal, business and social lives. Other newsworthy transgressions such as those at WeWork and Theranos showed the dangers of allowing personal relationships and business interests to mingle in the workplace. When high-ranking executives abuse their positions of power, they not only damage the reputations of the individuals involved but, also hurt their companies, financially and in terms of morale.
CEOs and employees have the obligation to act in the best interests of their shareholders and the company. This means avoiding behavior that could be seen as a conflict of interest or that could damage a company's reputation. Blurring the line between business and personal life can carry serious consequences, including reputational damage, market value loss, and legal troubles.
This wave of CEOs ‘behaving badly’ coincides with the viral interview featuring Rolling Stone co-founder Jann Wenner late last week. When discussing his upcoming book, "The Masters," featuring interviews with iconic rock legends, (all of whom were white males) with the New York Times, he admitted that female artists and musicians of color were "not in his zeitgeist" and deemed them insufficiently articulate on an intellectual level.
When questioned about Joni Mitchell, Wenner doubled down on his statement, claiming she didn't meet his criteria for being a "philosopher of rock." These comments sparked widespread criticism, with many condemning his remarks as both racist and sexist. Last Saturday, just over a day after his brutal comments were first made public, Wenner was ousted from the Rock & Roll Hall of Fame Foundation board.
It all goes to show, integrity matters—both in action and speech.