CEOs Forced To Resign Because of Scandals

By Ellen Kershner on May 25 2020 in Economics

Adam Neumann was forced to resign from WeWork because of multiple claims of unprofessional behavior. Image credit: wikimedia.org
Adam Neumann was forced to resign from WeWork because of multiple claims of unprofessional behavior. Image credit: wikimedia.org
  • A chief executive officer (CEO) functions as a company’s highest-ranking executive
  • This caused shareholders to lose approximately $11 billion dollars.
  • Wynn later faced several sexual assault allegations
  • Schnatter disagreed with how Goodell had handled national anthem protests, and used racial slurs
  • Former WorldCom CEO Bernie Ebbers was found guilty of leading the largest accounting fraud in history back in 2002.

A chief executive officer (CEO) functions as a company’s highest-ranking executive, and depending on the organization a CEO's responsibilities can be quite varied. In general, a CEO manages overall resources and operations, makes major company decisions, is the main public face for the company, and acts as the main communication point between corporate operations and the company’s board of directors.

CEOs are elected by a company’s board and shareholders, and most large companies have several throughout their lifespans. A CEO can be fired by a company's board of directors, or resign. If the CEO does not own a controlling share, he or she has little choice but to step down when voted out. Although all the details may not be public knowledge, many CEOs have been ousted for scandalous reasons.

Kenneth Lay, Enron

Kenneth Lay was convicted of fraud and conspiracy. Image credit: medium

Kenneth Lay was one of the energy-trading giant Enron’s original founders, and the company was valued at $68 billion in 2000. Enron got into hot water in 2001 when investment analysts began looking into the company's accounting books. The company’s stock price took a nosedive, dropping from more than $90 to less than $1. This caused shareholders to lose approximately $11 billion dollars. When Enron filed for Chapter 11 bankruptcy, it was the biggest corporate bankruptcy in U.S. history. Kenneth Lay and Jeffrey Skilling were both convicted of fraud and conspiracy in 2006. Lay passed away from a heart attack before sentencing, and Skilling was released from jail in 2019.

Harry Stonecipher, Boeing

Stonecipher was ousted from Boeing because he was having an affair with a female executive. Image credit: medium

Stonecipher took over as Boeing’s CEO in 2003, but his tenure did not last long. Only 18 months after taking the reins, he became embroiled in a scandal. Investigators were looking into illicit emails between the new CEO and a female executive and discovered that the two were having an affair.

Steve Wynn, Wynn Resorts

Steve Wynn resigned as Wynn Resorts chairman due to sexual assault allegations. Image credit: casino.org

As the founder of Wynn Resorts, Steve Wynn got into the casino business in 1967 when he took over the Golden Nugget in Las Vegas. He later built The Bellagio and The Mirage on the Strip. It all came to a crashing halt when Wynn later faced several sexual assault allegations. He resigned as Wynn Resorts chairman and also stepped down as the Republican National Committee’s finance chairman in early 2018.

Adam Neumann, WeWork

Former WeWork CEO Adam Neumann was accused of questionable financial dealings. Image credit: wikimedia.org

Former CEO and co-founder of WeWork Adam Neumann parted ways with his company in 2019. WeWork buys real estate space and converts it into smaller offices. It then rents the space to people who can use a fully stocked office space, without having to foot the bills for a full office. Neumann was accused of questionable financial dealings, a botched IPO, smoking marijuana on private jets, and drinking tequila at work. Majority stakeholder SoftBank forced Neumann out in 2019.

John Schnatter, Papa John’s

Former Papa John's CEO John Schnatter was caught using racial slurs. Image credit: nrn.com

The familiar face from the Papa John’s commercials was disgraced ex-CEO John Schnatter. In 2018, he was widely criticized for the comments he made about NFL commissioner Roger Goodell. Schnatter disagreed with how Goodell had handled national anthem protests and used racial slurs that were heard on a conference call. Schnatter later apologized and eventually resigned. He is still on the Papa John’s board, owns 24%, and his face is still seen on their pizza boxes.

Mark Parker, Nike

Former Nike CEO Mark Parker was replaced following the Oregon Project doping scandal. Image credit: highsnobiety.com

In 2019, Nike’s Board of Directors announced that longtime CEO Mark Parker was being replaced by eBay CEO John Donahoe. Parker was let go because of possible ties to the “Oregon Project,” Nike’s performance-enhancing drug scandal. Nike had put together a running group to promote U.S. long-distance running, but an investigation by the United States Anti-Doping Agency allegedly found that illegal drugs were being pushed to the athletes.

Bernie Ebbers, WorldCom

Bernie Ebbers was charged with nine felonies and was sentenced to 26 years in jail. Image credit: moneyweek.com

Former WorldCom CEO Bernie Ebbers was found guilty of leading the largest accounting fraud in history back in 2002. As head of the telecommunications company, Ebbers had worked to make it one of the biggest companies on the planet. Investigators discovered that WorldCom had over $11 billion worth of accounting misstatements; Ebbers was also accused of taking $366 million dollars’ worth of personal loans from WorldCom. The stock plunged from $64 to about $2 a share, and cost “stockholders more than $100 billion in losses,” according to Time.com. Ebbers was charged with nine felonies and was sentenced to 26 years in the Big House.

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