Dealing with the Unethical CEO
The chief legal officer can play an important role in guiding corporate leadership's response to the results of an important new study on the termination of “unethical” CEOs.
June 05, 2017 at 02:05 PM
5 minute read
The chief legal officer can play an important role in guiding corporate leadership's response to the results of an important new study on the termination of “unethical” CEOs. This, as boards seek to balance appropriate levels of executive accountability with the benefits of maintaining a close relationship with the CEO, and collaborate with the CEO to encourage entrepreneurship and informed risk taking.
The percentage of CEOs terminated for questionable behavior has increased approximately 36 percent over the past five years, according to the Study, mentioned in a May 14 report on CEO succession prepared by PWC's consulting affiliate, Strategy & Business. These lapses included environmental disasters, insider trading, résumé fraud, accounting scandals and sexual misconduct.
The study also determined that the rate of ethics-based termination dismissals was 44 percent higher among CEOs who simultaneously served as Chair than for those not serving in combined CEO/Chair positions. In addition, it also identified a series of trends that contributed to the increase in these ethics-based dismissals, including , lack of public tolerance for ethical lapses, improved corporate governance practices, increasing governmental regulation, greater operating risk, the impact of digital communications, and 24/7media attention.
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