What happens when companies face risks from their CEOs?

October 2, 2018 4:50 am Published by Leave your thoughts


One topic I don’t think people write about enough is how tenuous the reputations of publicly traded companies can be if their CEOs’ behavior becomes erratic or otherwise jeopardizes their ability to lead a company. Most recently in the news, Elon Musk, CEO of Tesla, was sued by the SEC after sending out a tweet suggesting he had intentions of making the company private. Not only was the information he provided intentionally misleading, quoting a target share price of $420. But, he said that funding had been secured to pull the trigger when in fact nothing was in writing. He did it as a joke without the prior knowledge of the Board or Head of Investor Relations! Musk settled for $20 million and loss of role as Chairman for three years. He also had some scuffles with others over his tweets this past summer.  NY Times


Last summer, Travis Kalanick resigned as CEO of Uber after the company kept ending up in the news for all the wrong reasons: sexual harassment, an intellectual property lawsuit, spyware, and law enforcement invasion. And, this isn’t a complete list. Uber would not have become a $70 billion company as fast as it did without Kalanick’s relentless efforts to best competitors at any cost –until it did cost him. He was forced out as CEO by shareholders. He even got into a shouting match with an Uber driver that went viral.


In 2012, Micron CEO Steve Appleton was fatally injured when an experimental plane he had built from a kit crashed in Boise, Idaho. Further, an investigation revealed that he hadn’t completed recommended training on recovery maneuvers necessary to handle emergency situations in flight. In fact, insurance coverage stipulated additional pilot training that he never received. The public did not know that was that he was an avid pilot of experimental planes and had been involved in at least one prior accident. It wasn’t a requirement at the time. But, because of his untimely death, some Boards of Directors began to require potential CEOs to publicly disclose involvement in “high-risk” activities. Boise Weekly The irony of CEO behavior causing reputational, financial or regulatory risk to the firms that they head is that the same drive that powered their pursuit of success can later become their weakness. Just as in investing, it’s up to you to decide your appetite for risk.

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This post was written by Daniel Jones

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