Issue: CEO Conduct CEO Conduct

Issue: CEO Conduct

CEO Conduct

By: David Milstead

Pub. Date: October 1, 2018 Access Date: September 30, 2021 DOI: 10.1177/237455680429.n1 Source URL: http://businessresearcher.sagepub.com/sbr-1946-108017-2904833/20181001/ceo-conduct ©2021 SAGE Publishing, Inc. All Rights Reserved. ©2021 SAGE Publishing, Inc. All Rights Reserved. Will corporate boards crack down? Executive Summary

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. Full Report

Protesters demanding that CBS chief Leslie Moonves be fired delivered their message via rolling billboard as company executives met in Beverly Hills, Calif. (Mark Ralston/AFP/Getty Images)

As spring turned to summer in 2018, it seemed to be housecleaning season in corporate America. In less than four weeks in June and July, three major companies – Intel Corp., Barnes & Noble and Texas Instruments – announced they had terminated their CEOs, or

Page 2 of 12 CEO Conduct SAGE Business Researcher ©2021 SAGE Publishing, Inc. All Rights Reserved. allowed them to resign, after they violated company policies. While Intel acknowledged its CEO had “a past consensual relationship with an Intel employee,” Texas Instruments simply cited “personal behavior” and Barnes & Noble initially gave no further details. 1 An even bigger fall from grace came in September, when CBS’s powerful CEO, Leslie Moonves, was ousted amid accusations that he had sexually harassed 12 women and misled his board about the situation. Shortly afterward, the network fired Jeff Fager, the longtime head of its showcase news program “60 Minutes,” for allegedly pressuring a CBS News reporter who was examining accusations that he had fostered a culture of harassment at the program. Both Moonves and Fager have denied any wrongdoing. 2 The departures came as the #MeToo movement continued to rock the worlds of entertainment, media and politics, with many powerful men forced to resign after women came forward to allege a range of inappropriate behavior. So it was easy to see the news as part of a sudden sea change in the culture. The resignation of Intel’s Brian Krzanich “is Corporate America’s Biggest #MeToo Moment,” said the headline of a Bloomberg piece by opinion columnist Shira Ovide, who said “the zero-tolerance era for workplace conduct has its biggest cautionary tale so far.” 3 The evidence indeed suggests companies are taking executive misbehavior of all kinds more seriously, from ill-considered racial comments by Papa John’s Pizza founder John Schnatter to Travis Kalanick’s creation of Uber’s aggressive and at times abusive corporate culture. 4 This isn’t an entirely new phenomenon; there have been a number of cases over the past decade in which CEOs stepped down involuntarily for conduct that boards deemed inappropriate. But what seems clear from the recent wave of departures is that the standards for executive behavior are now as high as they have ever been, and companies may be doing a better job of recognizing inappropriate behavior and dealing with it swiftly. “The world has changed very, very substantially since the Harvey Weinstein revelations,” says Washington attorney Nell Minow, referring to the flood of sexual abuse accusations against the Hollywood producer that emerged in October 2017 and triggered the #MeToo campaign. “There is a newly zero- tolerance attitude in the world – and long overdue,” says Minow, a pioneer in the field of corporate governance, or how boards manage companies. The empowerment of the aggrieved, from a more welcoming internal culture for their complaints to an army of social media supporters at the ready, suggests there will be more examples of company boards acting swiftly and decisively to separate themselves from a top executive who fails to meet society’s standards. While the legal liability for failure to act hasn’t changed markedly, the penalty in terms of reputational damage and customer outrage has never been higher. To cope, experts say companies must have clear policies and expectations in place to deal with bad behavior – and a deep bench of executives to ensure there’s no leadership vacuum when a CEO departs unexpectedly. Today’s workplace is markedly different from a half-century ago. The television series “Mad Men,” which depicted a New York City advertising firm in the 1960s, reflected the realities of that era, when workplace behavior between male executives and female administrative help that today is recognized as sexual harassment – even assault – was rampant and largely unpunished. Over the decades, as women have joined the workforce as professionals, peers and superiors to men, the courts and federal law have played a part in changing that workplace culture, albeit slowly. That began with passage of the 1964 Civil Rights Act, which banned workplace discrimination based on, among other things, gender. In 1981, the federal Equal Employment Opportunity Commission promulgated guidelines defining two forms of sexual harassment: “quid pro quo,” in which something is made dependent on granting sexual favors, and unwelcome advances that create a hostile work environment. 5 The 1991 Civil Rights Act gave victims of gender discrimination the right to seek compensatory and punitive damages. 6 Multiple court cases have made companies liable for creating or enabling hostile environments. 7 Larger Companies More Likely to Oust CEOs

Percent ousted for ethical lapses, U.S./Canada/Western Europe, 2007-16

Source: Per-Ola Karlsson, DeAnne Aguirre and Kristin Rivera, “Are CEOs Less Ethical Than in the Past?” Strategy+Business, May 15, 2017, Exhibit 2, https://tinyurl.com/ybouvgep

CEOs at larger companies are more likely to be ousted for ethical problems than their counterparts at smaller companies.

Many companies began to take notice of the issue after female workers at a Mitsubishi Motors plant in Normal, Ill., won a $34 million class action settlement in 1998 in a sexual harassment case. 8 To protect themselves from liability, many corporations began requiring employees to undergo annual sexual harassment sensitivity training. But some companies have been slow to react to misbehavior by corporate leaders. Former Fox News personality Bill O’Reilly, for instance, cost the network $45 million in settlements with six accusers before he was fired in April 2017. 9 A year earlier, Fox forced Chairman Roger Ailes to resign after the company paid $20 million to settle a sexual harassment lawsuit by former “Fox & Friends” co- host Gretchen Carlson. 10 All in all, significant change is still a relatively recent development. Minow cites a story from 2004 that illustrates how different a company’s reaction was then to alleged executive misbehavior. A woman sued the Sara Lee Corp., alleging in her complaint that CEO Steven McMillan had rescinded a job offer when she refused to continue a sexual relationship with him. The company engaged lawyers to investigate the matter, but instead of choosing a firm with no ties to the company, it selected the company’s outside counsel, which also had represented the CEO personally. According to the Chicago Tribune, the company denied that there was a conflict – because the allegations were false. One month later, a board member told Fortune magazine that the “independent investigation” had exonerated McMillan. 11 “Thankfully, you cannot imagine that response today,” Minow says. A 2005 Wall Street Journal article, detailing how Boeing had asked CEO Harry Stonecipher to resign after an affair with an executive at the company, is a window into that time. “For a major U.S. corporation to boot a top executive because of romantic indiscretions, particularly if the affair is consensual, is rare indeed,” the story observed, adding that Boeing’s move probably was motivated by the fact that it had brought back Stonecipher, its retired president, to restore the company’s reputation after a string of ethical scandals. “Boeing and countless other major corporations generally don’t fire staffers involved in a consensual affair where neither partner directly reports to the other.” 12 In the years that followed, however, companies shifted their views, and some also established policies that restricted employee relationships and broadened definitions of what “direct reports” meant. After all, every employee in a company ultimately reports to a CEO, even if there are numerous managers in between. In addition, the early 2000s saw companies coming to grips with financial and accounting scandals by companies such as Enron and

WorldCom. As part of the legal and regulatory response that evolved over the following years, companies were required to establish whistleblower hotlines and pay greater heed to corporate codes of ethics, which came to address personal relationships within the company. As a result of these changes in attitude and policy, the laissez-faire attitude toward CEO sexual conduct described in the article about Boeing vanished, even before the #MeToo movement took off. In the last several years, a number of companies have forced their CEOs to resign after they had affairs or engaged in personal relationships that were deemed to have violated the company’s code of ethics: In 2012, Best Buy CEO Brian Dunn – only the third top leader in the retail chain’s history – resigned after the company’s audit committee began investigating “certain issues … regarding Mr. Dunn’s personal conduct.” 13 Later that year, the incoming CEO of aerospace giant Lockheed Martin, Christopher Kubasik, resigned from his president’s position following his admission, after an employee came forward with concerns, of “a close personal relationship with a subordinate employee.” 14 In 2016, Priceline Group CEO Darren Huston resigned after an internal investigation by the online travel company into a personal relationship he had with an employee. 15 In February 2018, Lululemon CEO Laurent Potdevin resigned after the athleisure wear company said it “expects all employees to exemplify the highest levels of integrity and respect for one another, and Mr. Potdevin fell short of these standards of conduct.” 16 CNBC reported he had a multi-year relationship with a designer at the company who had served both as an employee and as a contractor. 17 In all cases, the company said the CEO behavior violated its code of ethics or similar rules. “Anytime you have a violation of company policy by the CEO, the board has to act,” says Charles Elson, the director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “You can’t have one set of rules for the CEO and another set for everyone else.… Otherwise your policies fall apart.” In addition, Elson says it is “a question of judgment, beyond the policy violation. Thirty years ago these sorts of matters were not considered judgmental issues that a board might have focused on. Culture has changed.… Today it is elevated to a matter of judgment that is more serious.” Watch video with political scientist Cynthia Enloe on the history of the term sexual harassment:

It’s not just incidents of inappropriate relationships that have led to CEO dismissals in recent months. In June 2017, major institutional investors in the privately held ride-sharing company Uber demanded, and received, founder/CEO Kalanick’s resignation after a series of problems, including accusations of a sexist corporate culture and the revelation that it used software to actively evade law enforcement. 18 Schnatter resigned as Papa John’s CEO in 2017 after he made controversial comments about the NFL, of which his company is a sponsor, and football players who kneel during the national anthem. In 2018, he left his chairman’s post after news reports revealed he’d used the “n-word” racial slur in a conference call with a marketing agency. In a letter to the board alleging he was unfairly forced to resign, he said he used the word in describing the past language of Colonel Harland David Sanders, founder of Kentucky Fried Chicken, while saying the language was inappropriate. 19 Schnatter is now suing Papa John’s, attempting to return as chairman. 20 From the sexual matters to reports of a hostile work environment to the tipster who told the media what happened on the Papa John’s conference call, the number of incidents of poor corporate behavior seems to be increasing. What may be happening, however, is that in today’s tell-all, social media-saturated culture, questionable conduct is more likely to be reported internally or exposed externally. And when that happens, the public pressure on a corporation is unlike anything experienced in the pre-social media era. Twitter allows any user to respond directly to a company, blunting or countering its attempts at image rehabilitation. Papa John’s experienced the backlash, with Twitter users employing Schnatter’s problems as a springboard to call him and the company racist – and complain about the quality of the chain’s pizza. 21 “Is @PapaJohns really trying to give away free pizza to make us forget the fact it’s built off racism?” tweeted @AshleyCarnx in response to a Schnatter tweet promoting his own website, “savepapajohns.com.” 22 Chas Rampenthal, general counsel at law-services company LegalZoom, says these cultural changes are “empowering people to come Page 5 of 12 CEO Conduct SAGE Business Researcher ©2021 SAGE Publishing, Inc. All Rights Reserved. forward when they feel like they’ve been wronged. And with the proliferation of social media and the ability to gather an audience that you used to never have, that empowers people as well.” Shannon Gordon, CEO of theBoardlist, a group designed to promote women as executives and board members, also believes the balance has shifted toward exposure. “It’s not like sexual harassment and some of these issues that have plagued a number of companies in the last year is a new thing,” she says. “This has obviously been happening for a long time, and then there have been varying degrees of accountability over time. I think the difference is now that with the #MeToo movement, we’ve just seen more and more people come forward and feel brave enough to talk about these things publicly. And so, more cases are being revealed. And as a result of that volume, there is more appetite to understand what is the right path to accountability.” Shareholder thinking on these matters also has evolved. For one, the advocates of the environmental/social/governance movement, who feel that companies can “do well by doing good,” expect a greater degree of social responsibility than shareholders of past eras exhibited. Yet even shareholders who do not fall into this camp have become less tolerant of needless reputational risks. “I don’t view the corporation as a social enterprise to do good; it’s a profit enterprise,” says Elson, the Weinberg Center director. “But to make a profit, you have to be in sync with cultural norms. Shareholders are members of society and if shareholders believe that not [observing cultural norms] damages the economic value of the corporation, they are going to object.” The circumstances show the variety of fact patterns that led companies to replace a CEO for personal relationships. In many cases, a consensual relationship that nonetheless violated company policies was the triggering event. But in some instances, the relationship was accompanied by expense-account abuse, or misleading statements by the CEO to directors or investigators about the relationship. In 2010, Hewlett-Packard forced CEO Mark Hurd to resign after it determined his expense reports said he had been dining repeatedly with a security guard, when his companion was actually an HP contractor hired to serve as a hostess for customer events. A report in The Wall Street Journal said the company’s board ultimately “lost confidence he was being honest with them about his relationship” with the woman. 23 And the ultimate fate of many of these CEOs differs. Dunn, the former Best Buy CEO, has never led a public company again. Hurd promptly joined computer technology company Oracle as its co-president and is now CEO. Gary Friedman, who resigned as CEO of Restoration Hardware in 2012 for undisclosed reasons later reported by The New York Times as due to a relationship with an employee, was rehired by the company to his old position less than a year later. 24 The situations underscore the great human-resources challenges companies now face: One, to set a tone at the top and have robust policies and procedures that apply to all employees equally; two, to have a succession plan in place for the unexpected departures of key executives. More Boards Discussing Sexual Harassment

Company boards’ responses to #MeToo movement

Note: Exact wording of questions as follows: “Has your board of directors discussed the accusations coming out across Silicon Valley of sexually inappropriate behavior and/or sexism or the #MeToo movement?”; “Is your board of directors discussing implementing a plan of action as a result of these revelations?”; “Has your board already taken action as a result of these revelations?” Sources: “Time for Boards to Catch Up to VC’s When it Comes to Addressing Workplace Sexism and Sexual Harassment,” theBoardlist, Medium, April 11, 2018, https://tinyurl.com/y8smsv2k; “#MeToo theBoardlist Action Survey,” theBoardlist, March 26, 2018, charts 2.7, 2.8, 2.10, https://tinyurl.com/ycm84y6m

The number of company boards that have discussed the allegations arising from the #MeToo movement has almost doubled in the past year, as has the number of companies implementing plans of action as a result of #MeToo, although still short of a majority.

Despite the high-visibility firings and resignations, many companies may be unprepared. In a February/March 2018 survey of corporate board members, theBoardlist found that while the number of companies discussing the accusations arising from the #MeToo movement had increased significantly, most still had not implemented or discussed implementing a plan of action in the wake of #MeToo. It was the group’s second survey on the topic, following one conducted prior to #MeToo. 25 “We decided to repeat this survey to see if the numbers had moved,” theBoardlist CEO Gordon says. “And they had, but not by any stretch to a degree which you would hope. And so, when we asked people ‘Why do you think these conversations aren’t being had?’ the kinds of answers we were getting [were] ‘It’s not a board issue’ or “We don’t have this problem. That doesn’t go on in our company.’ It’s a feeling amongst [some] boards that somehow issues related to workplace conduct and sexual harassment aren’t necessarily the purview of the board. I think it’s really interesting, especially given the mandates of boards to help companies navigate their most strategic issues. It points to some blinders that need to be addressed.” Indeed, not all examples of ousted CEOs reflect prompt, decisive action. When CBS’s Moonves, a giant in the entertainment industry, was ousted, it came to light that members of the company’s board had first learned of allegations against him in January, several months before The New Yorker first published an article detailing multiple allegations of sexual assault or harassment. The CBS board, a Wall Street Journal article suggested, was hampered by infighting on other strategic issues. “Both sides dug in, instead of working together to remove a risk that threatened all parties,” the story concluded. 26 Companies faced with firing their CEO for an ethics violation, often suddenly and unexpectedly, have an even greater problem if they do not have in place a clear succession plan that can serve as a roadmap for a CEO-in-waiting. In the summer 2018 departures, Texas Instruments had to bring back its chairman, Rich Templeton, to his old roles of president and CEO to replace Brian Crutcher. Barnes & Noble had to create an “office of the CEO” with three executives to fill in for fired CEO Demos Parneros. Intel appointed its chief financial officer as interim CEO and promised a “robust search” for a permanent leader after Krzanich’s departure.

Bruce Weinstein, a consultant and author who brands himself as “The Ethics Guy,” says a company cannot eliminate the problem of hiring executives who fail ethically, but it can decrease the odds. One, he says, companies should be clear about their values. “If they’re not clearly demarcated on the top of the website, that company has a problem. To find out what a company stands for in this day and age, two clicks is too many.” Two, too many job descriptions focus exclusively on knowledge and skill but do not include values. “None of these companies specifically talks about honesty, accountability, fairness, courage in the job descriptions,” Weinstein says. Three, companies need “to interview for character as well as conduct,” he says. “I meet some resistance along the way because people say, ‘You can’t evaluate character. We have different notions of what character is. It makes me uncomfortable to talk about it. I just want to assume that people are honest unless they give me a reason not to believe that they are.’ All of this is total nonsense. Not only can boards of directors interview for character, they must.” About the Author

A Denver-based writer, David Milstead is a regular contributor to The Globe and Mail, the national newspaper of Canada. He has individually or jointly won nine national awards from SABEW, the Society of American Business Editors and Writers. In previous reports for SAGE Business Researcher, he wrote about Accounting Trends, Corporate Taxes, The Fiduciary Rule, Corporate Governance, The CEO as Leader and Facebook’s Stumbles. Chronology

1964-2006 Laws and court rulings establish standards. 1964 Congress approves and President Lyndon Johnson signs into law a civil rights act that outlaws discrimination in the workplace based on gender, among other things. 1981 The U.S. Equal Employment Opportunity Commission creates guidelines that define two forms of sexual harassment: “quid pro quo,” in which something is made dependent on the granting of sexual favors; and unwelcome advances that result in a hostile work environment. 1991 The 1991 Civil Rights Act allows gender discrimination victims to seek both compensatory and punitive damages. 1998 The U.S. Supreme Court rules that employers are liable for sexual harassment even when a supervisor’s threats are not carried out, but that an employer can mount a defense by showing it tried to prevent or correct sexual harassment and the employee did not try to stop the behavior by utilizing the employer’s procedures. 2005 Boeing asks CEO Harry Stonecipher to resign after an affair with a company executive. The Wall Street Journal calls the decision “rare” and chalks it up to Boeing’s desire to restore the company’s reputation after a string of ethical scandals. 2006 Activist Tarana Burke begins using the phrase “Me Too” on a page on the social network MySpace designed to help survivors of sexual violence, particularly young women of color from poor communities. 2010-Present Boards examine CEO conduct. 2010 Hewlett-Packard asks CEO Mark Hurd to resign after it determines his expense reports said he had been dining repeatedly with a security guard, when his companion was actually an HP contractor hired to serve as a hostess for customer events. A Wall Street Journal report said the company’s board ultimately “lost confidence he was being honest with them about his relationship” with the woman. 2012 Gary Friedman resigns as CEO of Restoration Hardware for undisclosed reasons, later reported by The New York Times as due to a relationship with an employee. He is rehired to his old position less than a year later. 2016 Priceline Group CEO Darren Huston resigns after an internal investigation into his personal relationship with an employee.

2017 Allegations of sexual harassment and assault against Hollywood producer Harvey Weinstein lead to a flood of similar accusations against other prominent men and focus intense national attention on the issue. The #MeToo hashtag goes viral when actress Alyssa Milano, supporting a friend making claims against Weinstein, tweets, “If you’ve been sexually harassed or assaulted write ‘me too’ as a reply to this tweet.” 2018 Lululemon CEO Laurent Potdevin resigns after he reportedly had a multi-year relationship with a designer who had been both an employee and a contractor. (February) … Intel CEO Brian Krzanich resigns after the company says he had “a past consensual relationship” with an employee. (June) … Texas Instruments CEO Brian Crutcher resigns due to personal behavior that is “not consistent” with the company’s “ethics and core values.” (July) … Barnes & Noble CEO Demos Parneros resigns “for violations of the company’s policies.” He sues for defamation, and the company responds by saying one of the violations involved allegations of sexual harassment. (July-August) … CBS CEO Leslie Moonves resigns as the company’s board investigates detailed multiple allegations of sexual assault or harassment revealed by The New Yorker (September).

Resources for Further Study Bibliography

Books

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.

Articles

“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/y8smsv2k. The blogpost discusses the results of a survey by theBoardlist, a group formed to promote women as board members and executives, on companies’ responses to workplace sexism and harassment. 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/y7q2n8oh. A behind-the-scenes look at deliberations among Hewlett-Packard directors shows how one board wrestled with the possibility that its CEO misled it about his personal relationships. 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/yd8tpevj. The Journal reveals how problematic personal dynamics on the CBS board may have prevented the directors from dealing promptly with allegations of its CEO’s misbehavior. 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/y8vtj4gw. An article detailing Boeing’s decision to ask CEO Harry Stonecipher to resign illustrates how different corporate culture was 13 years ago. McGregor, Jena, “What do companies really have to reveal when a CEO is ousted?” The Washington Post, July 6, 2018, https://tinyurl.com/y7a7rlu5. A journalist shows that companies have wide discretion in not giving too many details about why a CEO is leaving the company. Ovide, Shira, “Intel Is Corporate America’s Biggest #MeToo Moment,” Bloomberg, June 21, 2018, https://tinyurl.com/y7t3vwcp. In examining the departure of Intel’s CEO, a Bloomberg Opinion columnist says “the zero-tolerance era for workplace conduct has its biggest cautionary tale so far.” Rampenthal, Chas, “Is Workplace Dating Really Off Limits?” Inc., Sept. 18, 2012, https://tinyurl.com/ybj2qxqn. As stories of companies dismissing their CEOs for workplace relationships became more commonplace, the general counsel of law-services company LegalZoom examined how companies should develop policies on office romance. 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/yaq8e8pg. The chief officer for risk, reputation and regulatory affairs at the financial consulting firm

Deloitte examines how to build a solid reputational risk framework.

Reports and Studies

“2020 Women On Boards Gender Diversity Index,” 2020 Women On Boards, accessed Sept. 21, 2018, https://tinyurl.com/ybnfq82m. A group founded in 2010 by two women concerned about the lack of women in corporate leadership roles tracks the progress of women corporate directors from 2011 to 2017. “How the Reputation Risk of #MeToo is Forcing Businesses to Reevaluate Their Corporate Culture,” Temin and Company, 2018, https://tinyurl.com/yd4j6fjv. A crisis-management firm says #MeToo incidents in the workplace “happen within a culture that somehow sanctions them.” Graf, Nikki, “Sexual Harassment at Work in the Era of #MeToo,” Pew Research Center, April 4, 2018, https://tinyurl.com/y99fqe9y. A survey of attitudes about workplace harassment by a Washington-based research group. 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/y7a5q68d. Researchers found that sexual harassment “increases financial stress, largely by precipitating job change, and can significantly alter women’s career attainment.” The Next Step

Lawsuits

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/y9cq9b26. The recently dismissed CEO of Barnes & Noble filed a lawsuit against his former employer alleging defamation and breach of contract. The company responded by saying that he was fired over accusations of sexual harassment. James, Meg, “CBS hit with shareholder lawsuit over CEO Leslie Moonves’ alleged sexual misconduct,” Los Angeles Times, Aug. 27, 2018, https://tinyurl.com/yabfll9k. CBS shareholders have filed a class-action suit against the media company for failing to disclose harassment claims against former CEO Leslie Moonves to the U.S. Securities and Exchange Commission. Wise, Alana, and Liana B. Baker, “Papa John’s founder says successor not right fit for CEO,” Reuters, July 26, 2018, https://tinyurl.com/y89vf99q. The founder of the Papa John’s pizza chain, who was ousted after he allegedly made racially insensitive comments, is suing the company and criticizing its choice for his replacement.

Silicon Valley

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/ydzxvt2e. Silicon Valley executives have sharply divergent views about the Facebook CEO, ranging from “ruthless” to “highly capable.” Browne, Ryan, “Elon Musk smokes weed, sips whiskey on Joe Rogan’s podcast,” CNBC, Sept. 7, 2018, https://tinyurl.com/yccelre7. The Tesla CEO’s recent podcast interview, during which he smoked marijuana, was the latest in a series of controversial actions. 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/y7s6jjk8. With the exception of Musk, the current generation of tech CEOs is made up of low-key executives, a contrast to their brash predecessors, says a New York Times columnist. Organizations

American College of Governance Counsel c/o Frank M. Placenti, Squire Patton Boggs LLP, 1 E. Washington St., #2700, Phoenix, AZ 85004 1-602-528-4004 www.amgovcollege.org Professional, educational and honorary association of lawyers recognized for their achievements in the field of corporate governance. theBoardlist 995 Market St., Suite 304, San Francisco, CA 94103 1-415-692-5270 https://theboardlist.com @theboardlist Group that works to promote women as corporate board members.

Council of Institutional Investors 1717 Pennsylvania Ave., N.W., Suite 350, Washington, DC 20006 1-202-822-0800 www.cii.org @CouncilInstInv 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 1-202-663-4900 www.eeoc.gov @USEEOC 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 www.icgn.org @ICGNCorpGov 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 1-302-831-6157 https://www.weinberg.udel.edu/ 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. LegalZoom 101 North Brand Blvd., 11th Floor, Glendale, CA 91203 1-800-773-0888 www.legalzoom.com @LegalZoom For-profit company that provides internet-based legal services for entrepreneurs and small businesses. ValueEdge Advisors 111 Commercial St., Suite 302, Portland, ME 04101 https://valueedgeadvisors.com An advisory firm that includes corporate governance leaders Nell Minow, Robert A.G. Monks and Richard A. Bennett. Notes

[1] “Barnes & Noble Announces CEO Termination,” press release, Barnes & Noble, July 3, 2018, https://tinyurl.com/y86vkr5a; “Rich Templeton to reassume President and CEO roles in addition to his current role as Chairman; Brian Crutcher resigned as CEO,” press release, Texas Instruments, July 17, 2018, https://tinyurl.com/y8d5p58b; “Intel CEO Brian Krzanich Resigns, Board Appoints Bob Swan as Interim CEO,” press release, Intel, June 21, 2018, https://tinyurl.com/ybo2nxql. [2] James B. Stewart, “Threats and Deception: Why CBS’s Board Turned Against Leslie Moonves,” The New York Times, Sept. 12, 2018, http://tinyurl.com/y8rta6ed. [3] Shira Ovide, “Intel Is Corporate America’s Biggest #MeToo Moment,” Bloomberg News, June 21, 2018, https://tinyurl.com/yc5b2qqp. [4] Julie Jargon, “Papa John’s Founder Says Resignation Was a Mistake,” The Wall Street Journal, July 17, 2018, https://tinyurl.com/yd24b8rz; Mike Isaac, “Inside Uber’s Aggressive, Unrestrained Workplace Culture,” The New York Times, Feb. 22, 2017, https://tinyurl.com/z9pgrdb. [5] Sharon O’Malley, “Workplace Sexual Harassment: Will the latest changes lead to a shift in corporate culture?” CQ Researcher, Oct. 27, 2017, https://tinyurl.com/y7o7k7ph. [6] Ibid. [7] “Faragher v. City of Boca Raton,” Oyez, accessed Sept. 14, 2018, http://tinyurl.com/ycyc8l3m; “Burlington Industries, Inc. v. Ellerth,”

Oyez, accessed Sept. 14, 2018, https://tinyurl.com/y9zboyrh; “Pennsylvania State Police v. Suders,” Oyez, accessed Sept. 14, 2018, https://tinyurl.com/y8h9vq7d. [8] Stephen Braun, “Mitsubishi to Pay $34 Million in Sex Harassment Case,” Los Angeles Times, June 12, 1998, https://tinyurl.com/y7dsffr6. [9] Emily Steel and Michael S. Schmidt, “Bill O’Reilly Is Forced Out at Fox News,” The New York Times, April 19, 2017, https://tinyurl.com/m8o9943; Emily Steel, “How Bill O’Reilly Silenced His Accusers,” The New York Times, April 4, 2018, https://tinyurl.com/yagke9eg. [10] Daniel Wiessner and Jessica Toonkel, “Fox settles sexual harassment lawsuit for $20 million on Ailes’ behalf,” Reuters, Sept. 6, 2016, https://tinyurl.com/y8bhuxsd. [11] Ameet Sachdev and Susan Chandler, “Accusations of wrongdoing put reputations on the line,” Chicago Tribune, Aug. 6, 2004, https://tinyurl.com/y8luw565; John Simons, “A Sex Scandal Is In The Mix At Sara Lee,” Fortune, Sept. 6, 2004, https://tinyurl.com/y87jyllu. [12] Carol Hymowitz and Joann S. Lublin, “Many Companies Look the Other Way At Employee Affairs,” The Wall Street Journal, March 8, 2005, https://tinyurl.com/y79ekken. [13] Miguel Bustillo, “Best Buy CEO Quits in Probe,” The Wall Street Journal, April 10, 2012, https://tinyurl.com/ya98gnqf. [14] Andrea Shalal-Esa, “Incoming Lockheed CEO fired after admitting to affair,” Reuters, Nov. 9, 2012, https://tinyurl.com/y9jsapc4. [15] Mike Snider, “Priceline CEO ousted after having at-work relationship,” USAToday, April 28, 2016, https://tinyurl.com/y7lsx3oo. [16] “Lululemon Athletica Inc. CEO Laurent Potdevin Resigns,” press release, Lululemon Athletica Inc., Feb. 5, 2018, https://tinyurl.com/y9g2llas. [17] Christina Farr, Lauren Hirsch and Lauren Thomas, “Lululemon CEO left in part because of relationship with female designer at the company,” CNBC.com, Feb. 6, 2018, https://tinyurl.com/yacwdg2m. [18] Mike Isaac, “Uber Founder Travis Kalanick Resigns as C.E.O.,” The New York Times, June 21, 2017, https://tinyurl.com/y9dtxv76; Mike Isaac, “How Uber Deceives the Authorities Worldwide,” The New York Times, March 3, 2017, https://tinyurl.com/hbhonl6. [19] Jargon, op. cit. [20] Bret Thorn, “John Schnatter accuses Papa John’s leaders of breaching duty,” Nation’s Restaurant News, Sept. 10, 2018, https://tinyurl.com/y8lnxz8t. [21] Kate Talerico, “Twitter is roasting Papa John’s founder for using the N-word,” Louisville Courier-Journal, July 11, 2018, https://tinyurl.com/y734ronj. [22] Ash Carncross, (@AshleyCarnx), tweet at 7:17 a.m. Sept. 15, 2018, http://tinyurl.com/y82oe2pw. [23] Robert A. Guth, Ben Worthen and Justin Sheck, “Accuser Said Hurd Leaked an H-P Deal,” The Wall Street Journal, Nov. 6, 2010, https://tinyurl.com/y7q2n8oh. [24] Andrew Ross Sorkin, “Restoration Hardware Co-Chief Steps Down After an Inquiry,” The New York Times, Aug. 16, 2012, https://tinyurl.com/yad2gk59; Tiffany Hsu, “Gary Friedman returns as chairman, co-CEO of Restoration Hardware,” Los Angeles Times, July 3, 2013, https://tinyurl.com/y86v8vwn. [25] “Time for Boards to Catch Up to VC’s When it Comes to Addressing Workplace Sexism and Sexual Harassment,” theBoardlist, Medium, April 11, 2018, https://tinyurl.com/y8smsv2k; “#MeToo theBoardlist Action Survey,” theBoardlist, March 26, 2018, charts 2.8 and 2.10, https://tinyurl.com/ycm84y6m. [26] Keach Hagey 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/yazyvopu.

Page 12 of 12 CEO Conduct SAGE Business Researcher