CEOs’ Dodge of Relationship Questions Becoming Intolerable
We have two recent, high-profile examples of CEOs resigning for not disclosing, or not fully disclosing, romantic relationships with colleagues. The development underscores both the increasing intolerance of these dodges and the need to create an atmosphere in which they don’t occur.
On Sept. 19, Cboe Global Markets — owner of the Chicago Board Options Exchange — said that CEO Edward Tilly was stepping down after an internal probe revealed he hadn’t disclosed such personal relationships. A week earlier, Bernard Looney, CEO of London-based oil-and-gas behemoth BP, resigned after being “not fully transparent” about relationships with colleagues, according to the company. Both exits came as surprises.
The Looney story has legs in that it has since been reported, including in the FT on Sept. 29, that he may have given promotions to women with whom he had relationships.
All this is reminiscent of the situation confronted by fast-food giant McDonald’s starting back in 2019, a situation that, obviously, has had more time to develop.
Mickey D’s fired CEO Steve Easterbrook for engaging in a relationship with an employee that violated company policy. The next year, the company sued Easterbrook to yank back his severance package; it said the former firm leader lied about the number and extent of the relationships he had. In 2021, he returned $105 million in stock and cash in what The New York Times called “one of the largest clawbacks in the history of corporate America.”
A 2016 study in the Harvard Business Review of 38 incidents of questionable, though not illegal, behavior by CEOs found that 21 percent involved “a sexual affair or relations with a subordinate, contractor or consultant.”
The point is, CEOs being forthright about these situations (yes, a publicly traded company should disclose the relationships) entails creating an overall culture of honesty. Companies typically want their employees to be honest. It’s hard to develop such a culture if the firm leader dissembles.
In the case of CEOs, this is complicated by the (let’s face it) often-too-chummy relationships between CEOs and the boards of directors that hire them (and decide their pay packages). It’s the CEOs themselves who need to understand that transparency is a must. These recent “resignations” show that maybe boards are finally getting religion — they won’t tolerate anything less than full honesty.
And, as we can see, these incidents are tawdry for the companies, whose reputations take a hit because of them. The best way to avoid crises stemming from these episodes is to forge a culture in which trying to play cute with the truth just isn’t accepted.
Photo Credit: jon lyall/Shutterstock
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