Will corporate boards crack down?
It has been a season of upheaval at the highest levels of major U.S. corporations, from Barnes & Noble to Intel to CBS, as boards of directors have ousted CEOs over conduct that was once shrugged off. The #MeToo movement sparked last year by sexual assault allegations against Hollywood producer Harvey Weinstein is partially responsible for the new climate. But even before this, things were starting to change, as evidenced by the actions of several boards against top executives over a broad range of behavior earlier in this decade. Boards are moving to head off reputational damage in an environment dominated by social media-induced volatility and what one corporate governance advocate describes as a long overdue “zero-tolerance attitude.” In this new environment, experts say, companies must establish clear policies about what will not be tolerated and how it will be dealt with, and engage in careful succession planning to be prepared when the unexpected strikes.
Some key takeaways:
Company board members are becoming less patient with a wide variety of CEO failings, ranging from racially tinged remarks to corporate culture.
Most boards have not yet implemented a succession plan in the wake of the #MeToo movement, even though more are discussing the issues raised by the movement, according to a recent survey.
The ultimate fate of dismissed CEOs can vary greatly. Some have faded from the ranks of corporate leaders, while others have resurfaced relatively quickly.
Resources for Further Study
George, Bill, and Peter Sims, “True North: Discover Your Authentic Leadership,” Jossey-Bass, 2007. The former Medtronic CEO (George) and a venture capitalist (Sims) examine executive leadership via interviews with 125 CEOs.
Seierstad, Cathrine, Patricia Gabaldon and Heike Mensi-Klarbach, “Gender Diversity in the Boardroom,” Palgrave Macmillan, 2017. A collection of academic essays examines and analyzes the lack of female representation on corporate boards.
Weinstein, Bruce, “The Good Ones: Ten Crucial Qualities of High-Character Employees,” New World Library, 2015. A consultant who bills himself as “The Ethics Guy” says employers must hire for character and lists 10 qualities of high-character employees.
“Time for Boards to Catch Up to VC’s When it Comes to Addressing Workplace Sexism and Sexual Harassment,” Medium, April 11, 2018, https://tinyurl.com/
Guth, Robert A., Ben Worthen and Justin Scheck, “Accuser Said Hurd Leaked an H-P Deal,” The Wall Street Journal, Nov. 6, 2010, https://tinyurl.com/
Hagey, Keach, and Joe Flint, “CBS’s Handling of Les Moonves Accusations Hampered by Battle for Control,” The Wall Street Journal, Sept. 10, 2018, https://tinyurl.com/
Hymowitz, Carol, and Joann S. Lublin, “Many Companies Look the Other Way At Employee Affairs,” The Wall Street Journal, March 8, 2005, https://tinyurl.com/
McGregor, Jena, “What do companies really have to reveal when a CEO is ousted?” The Washington Post, July 6, 2018, https://tinyurl.com/
Ovide, Shira, “Intel Is Corporate America’s Biggest #MeToo Moment,” Bloomberg, June 21, 2018, https://tinyurl.com/
Rampenthal, Chas, “Is Workplace Dating Really Off Limits?” Inc., Sept. 18, 2012, https://tinyurl.com/
Saia, Chuck, “Reputation: How to Protect, Preserve and Enhance a Precious Asset,” The Wall Street Journal Risk & Compliance Journal, Sept. 7, 2016, https://tinyurl.com/
Reports and Studies
“2020 Women On Boards Gender Diversity Index,” 2020 Women On Boards, accessed Sept. 21, 2018, https://tinyurl.com/
“How the Reputation Risk of #MeToo is Forcing Businesses to Reevaluate Their Corporate Culture,” Temin and Company, 2018, https://tinyurl.com/
Graf, Nikki, “Sexual Harassment at Work in the Era of #MeToo,” Pew Research Center, April 4, 2018, https://tinyurl.com/
McLaughlin, Heather, Christopher Uggen and Amy Blackstone, “The Economic and Career Effects of Sexual Harassment on Working Women,” Gender & Society, May 10, 2017, http://tinyurl.com/
The Next Step
Hsu, Tiffany, and Alexandra Alter, “Barnes & Noble Says Former C.E.O. Demos Parneros Was Fired for Sexual Harassment,” The New York Times, Aug. 28, 2018, https://tinyurl.com/
James, Meg, “CBS hit with shareholder lawsuit over CEO Leslie Moonves’ alleged sexual misconduct,” Los Angeles Times, Aug. 27, 2018, https://tinyurl.com/
Wise, Alana, and Liana B. Baker, “Papa John’s founder says successor not right fit for CEO,” Reuters, July 26, 2018, https://tinyurl.com/
Abadi, Mark, “Twitter’s former CEO called Mark Zuckerberg a ‘ruthless execution machine,’ but many Silicon Valley insiders don’t agree,” Business Insider, Sept. 13, 2018, https://tinyurl.com/
Browne, Ryan, “Elon Musk smokes weed, sips whiskey on Joe Rogan’s podcast,” CNBC, Sept. 7, 2018, https://tinyurl.com/
Manjoo, Farhad, “The Metamorphosis of Silicon Valley C.E.O.s: From Big to Boring,” The New York Times, Sept. 12, 2018, https://tinyurl.com/
American College of Governance Counsel
c/o Frank M. Placenti, Squire Patton Boggs LLP, 1 E. Washington St., #2700, Phoenix, AZ 85004
Professional, educational and honorary association of lawyers recognized for their achievements in the field of corporate governance.
995 Market St., Suite 304, San Francisco, CA 94103
Group that works to promote women as corporate board members.
Council of Institutional Investors
1717 Pennsylvania Ave., N.W., Suite 350, Washington, DC 20006
Coalition of major investors, particularly public pension funds, that has advocated for corporate governance changes, such as greater board diversity, since 1985.
Equal Employment Opportunity Commission
131 M St., N.E., Washington, DC 20507
Agency responsible for enforcing federal anti-discrimination laws.
International Corporate Governance Network
Saffron House, 6-10 Kirby St., London, EC1N 8TS, UK
+44 (0) 207 612 7011
Global group of professionals and investors who advocate for good governance.
John L. Weinberg Center for Corporate Governance
103 Alfred Lerner Hall, 20 Orchard Road, University of Delaware, Newark, DE 19716
Established in 2000, one of the longest-standing corporate governance centers in academia and the only one in Delaware, the legal home for a majority of U.S. public corporations.
101 North Brand Blvd., 11th Floor, Glendale, CA 91203
For-profit company that provides internet-based legal services for entrepreneurs and small businesses.
111 Commercial St., Suite 302, Portland, ME 04101
An advisory firm that includes corporate governance leaders Nell Minow, Robert A.G. Monks and Richard A. Bennett.