Last week we posted on the CEO turnover problem both here and here. Today, I caught up to a lengthy CareerJournal.com article regarding How to Fire a CEO: It’s Harder to Sack the Boss. It is an interesting read about the multiple dismissals that have arisen recently. This topic hits home in that the United Healthcare imbroglio occurred in our backyard this year.

This is borders on the absurd:

Massachusetts Mutual Life Insurance Co. dismissed CEO Robert J. O’Connell last year, saying that he padded a retirement account by millions of dollars, misused corporate aircraft and conducted an affair with a female executive. But a panel of arbitrators said last month that MassMutual should not have terminated Mr. O’Connell for cause. The arbitrators found that Mr. O’Connell made questionable moves to benefit the retirement account and had affairs with two other employees, but said these did not amount to “willful gross misconduct” that materially damaged the company — as his contract required. MassMutual has appealed the decision, which could force it to pay Mr. O’Connell more than $40 million.

Wow. The obvious question is what would the arbitrators consider as “willful gross misconduct?” I really don’t want to know the answer to that question.

I guess this statement provides some insight into how these issues are handled:

It’s so hard to fire a CEO for cause that many boards don’t try, even when ethical problems are involved. Some boards work out other departure arrangements that allow the CEO to leave with severance or other benefits intact.

A few years back, we were involved with a customer that ended up firing their CEO. He was a complete maverick and a definite High D. He arbitrarily hired our services for a consortium for which his company was just one of many manufacturers. We ended up meeting with the president of this consortium who was a bit confused as to our reason for meeting. He proceeded with our hiring process until he got the word out to the other companies involved in the consortium. At that point, the hiring process was terminated.

The CEO for this company was fired not long after this event.

Posted By Derrick Moe | Compensation,Turnover | | Comments(0)