CEO Sex Scandals that Rocked Their Company

Jacob Harper |

On Aug. 30 it was revealed that Google Inc. (GOOG) co-founder Sergey Brin had left his wife of six years, 23andMe co-founder Anne Wojcicki. While this in itself is not news, the manner in which he did so is. Brin left Wojcicki for a current Google executive, raising all sorts of propriety concerns, and potentially creating upper-ranks turmoil in the tech giant, as the female executive in question was also romantically linked to yet another male executive at Google. To further compound the drama, Brin's siter-in-law is also one of the top exectuives at Google. It's still unclear what damage the soap opera in the upper echelons of Google will cause, but one thing is for certain: this isn't the first time a CEO has created problems for their company by canoodling with a co-worker.

While scandalous impropriety perpetuated by men in power is certainly nothing new, there’s certainly been a rash of high-profile CEOs  engaged in highly salacious behavior, often to the great detriment of the company they are in charge of. These four CEOs in particular did major damage to the businesses they were in charge of with their dalliances:

Harry Stonecipher

CEO, The Boeing Company (BA)

Stonecipher came into the role of CEO at Boeing after his predecessor Phil Condit was ousted over a corruption scandal involving government contracts. While Stonecipher avoided financial impropriety, in less than 15 months he too would be forced out, except for reasons far more salacious.

In Jan 2005, just over a year after he took over, the married Stonecipher began having an affair with Boeing executive Debra Peabody. The affair was brought to light by an employee who stumbled across an email exchange between the two that was romantic in nature, and the employee blew the whistle, alerting the higher-ups of the affair.

An internal investigation found the affair "would impair (Stonecipher’s) ability to lead the company." The company, which was still recovering from his predeccesor's scandals, reeled. Stonecipher resigned after being requested by the board to do so in Mar. 2005.

His wife filed for divorce a few days later.

John Browne

Group Chief Executive, BP plc (BP)

John Browne climbed all the way up from the bottom of BP’s corporate ladder to the top, starting with an apprenticeship in 1966 that ended with him becoming the company’s Group Chief Executive in 1996. His 30-year tenure to the company was brought to a halt after it came out that Browne had, to save face, lied about a key aspect of his personal life that almost sent him to jail.

Browne was gay, and while that in itself is certainly no crime, perjuring yourself to a court certainly is. Prior to the perjury issue, BP tried to give Browne the easy way out, announcing in July 2006 he’d retire in Dec. 2008. When it became clear a gossip rag was going to release these details of his personal life, and out him, Browne moved up the date of resignation. BP struggled with what to do, as Browne had been a well-respected member of the company for so long.

The issue at hand wasn’t Browne’s relationship itself, but him lying about how he’d met his boyfriend. While he had told the courts he met the man while jogging, he in fact had met his boyfriend on a male escort service. Browne left in May 2007, forfeiting a multi-million dollar severance package.

Brian Dunn

CEO, Best Buy Co, Inc (BBY)

Former Best Buy CEO Dunn was never proven to have engaged in an affair with a 29-year-old employee, but the evidence certainly illustrated an inappropriate relationship. Though following his mysterious departure in April 2012 for “personal conduct” issues, the rumor mill started spinning, for a time allegations of impropriety were nothing but rumors. A month later, however, the details began to emerge.

Dunn had lavished gifts upon the much younger employee, including trips to Vegas and concert tickets. While its unclear whether the relationship was sexual, Dunn foisted loads of attention on the women, at one point contacting her via phone over 300 times over a five-day period. According to the employee’s superior, the attention made it difficult to control the employee.

Despite being forced out, Dunn made out alright: he got a $6.6 million severance package, paid out when Best Buy was still reeling from incredibly disappointing sales. Of course, the company has turned things around nicely since Dunn’s departure.

Dov Charney

CEO, American Apparel Inc (APP)

You could write a book detailing American Apparel CEO Dov Charney’s peccadilloes, and one day someone probably will. What makes Charney unique on this list is that, despite nearly endless lawsuits, he is still the company’s CEO.

Charney’s story of building an American manufacturing empire from scratch is well-known in retail circles, and so are his allegations of sexual impropriety. There’s the seven simultaneous sexual harassment lawsuits various employees and freelance models leveled against him. Or Jane reporter Claudine Ko’s allegations he masturbated in front of her during an interview. At one point it was even feared that his various improprieties, namely a $260 million lawsuit brought by a former employee, would cripple the company outright.

Despite his sordid history, by 2013 almost all the allegations against Charney had been settled out of court or dismissed, including the $260 milion one. Charney, for what it’s worth, is doing pretty well in 2013: there is only one sexual harassment lawsuit lingering against him, one that has been pending since 2006.

(image of Dov Charney courtesy of Flickr)

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
GOOG Alphabet Inc. 789.29 12.87 1.66 1,821,914
BBY Best Buy Co. Inc. 49.00 -0.31 -0.63 4,294,387
BA Boeing Company (The) 156.49 1.10 0.71 2,707,872
BP BP p.l.c. 36.01 -0.18 -0.50 4,633,089
BITKF Biosign Technologies Inc 0.00 0.00 0.00 0

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