Image Source: jomomag
Volkswagen Chief Executive Martin Winterkorn resigned yesterday, succumbing to pressure for change at the German carmaker, which is reeling from the admission that it deceived U.S. regulators about how much its diesel cars pollute.
The world’s biggest carmaker by sales has admitted to U.S. regulators that it programmed its cars to detect when they were being tested and alter the running of their diesel engines to conceal their true emissions. During his eight years in charge, Winterkorn oversaw a doubling in Volkswagen’s sales and an almost tripling in profit. The U.S. Environmental Protection Agency (EPA) said on Friday that Volkswagen could face penalties of up to $18 billion.
Winterkorn said he was shocked that misconduct on such a massive scale had been possible at the company, but this is not the first time a CEO has had to step down in the face of a scandal. From cooking the books to sexual harassment charges, many CEOs in the past have given up their high-paying jobs and well-earned titles.
Here’s a list of 8 CEOs who fell from grace in the face of controversy.
Noel Biderman, Ashley Madison
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After Winterkorn, Noel Biderman is the most recent addition to the list of CEOs who had to step down over a controversy. The company slogan of Ashley Madison is “Life is short. Have an affair”. The controversial extra-marital affairs site was hacked in July, resulting in the leak of more than 30 million users’ highly compromising personal data. Facing catastrophic reputational damage as well as multiple lawsuits for hundreds of millions of dollars, parent company Avid Life Media announced on Friday that Biderman has left the company.
Bernie Ebbers, WorldCom
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Ebbers had started with a small telecommunications company that acquired smaller competitors and eventually created one of the largest companies in the world. In 2000, WorldCom was soaring, and his personal worth was more than $1 billion. But in 2002, investigators revealed that WorldCom had executed what was then the largest accounting fraud in history, with more than $11 billion in accounting misstatements. It was also alleged that Ebbers had taken $366 million in personal loans from the company. Ebbers was found guilty of nine felonies and sentenced to 25 years in prison. In September 2006, Ebbers drove himself to prison in his Mercedes
Mark Hurd, Hewlett-Packard
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Hurd stepped down from his post as chief executive officer of Hewlett-Packard on August 6, 2010 after the company found he submitted inaccurate expense reports that concealed his personal relationship with a female contractor who assisted on HP-sponsored events. The woman in question was a movie and reality-TV actress named Jodie Fisher, who sent the company a letter alleging sexual harassment that prompted the investigation. Though the expenses amounted to only $20,000, Hurd had to leave as his conduct “undermined the standards we expect of our employees” according to an HP board member.
Harry Stonecipher, Boeing
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Stonecipher came out of retirement to lead Boeing, following the resignation of Chairman and CEO Phil Condit in December 2003 over several scandals. Stonecipher orchestrated the merger between McDonnell Douglas and Boeing, and was widely credited with the resurgence of Boeing. But the scandal-hit aviation company was again in the headlines when an anonymous e-mail was sent that implicated Stonecipher in an affair with female executive Debra Peabody. Stonecipher was forced to resign at Boeing following the disclosure of his longtime consensual affair with a fellow Boeing employee, who was not a direct report and whom he later married.
Sanjay Kumar, Computer Associates
Image Source: bloomberg
Sanjay Kumar emigrated with his family to the United States in 1976 to escape civil unrest in his native Sri Lanka. He worked his way to the top of the IT industry and in 2002, Kumar became chairman and CEO of software tech company Computer Associates. Kumar resigned as chairman and chief executive in April 2004, following an investigation into securities fraud and obstruction of justice at Computer Associates. He remained with the firm in the new position of Chief Software Architect for about six weeks before leaving the firm altogether on June 4, 2004. In 2006, he pleaded guilty to securities-fraud charges and was sentenced to 12 years in jail.
Ramalinga Raju, Satyam Computer Services
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In 1987, Ramalinga Raju incubated Satyam Computer Services along with one of his brothers-in-law, DVS Raju. Raju navigated Indian bureaucracy to obtain the required clearance to transmit data from India making Satyam s pioneer of outsourcing from India. On 7 January 2009, Raju stepped down admitting to embezzlement of financial figures of the company to the tune of Rs 71.36 billion (approximately US$1.5 billion), including Rs 50.40 billion (approximately US$1 billion) of non-existent cash and bank balances. On 9 April 2015, Ramalinga Raju and his brothers were sentenced to 7 years in jail and fined Rs. 5.5 crore.
John Browne, BP
Image Source: businessinsider
Browne’s tenure at BP has been described as the company’s “golden period of expansion and diversification”. He engineered a merger with rival Amoco, and gained access to Russian oil reserves with the creation of TNK-BP. However, in May 2007, Browne stepped down after it was found he had lied to a court about his four-year relationship with Canadian boyfriend Jeff Chevalier. Browne wanted to stop the publication of personal details about their relationship, but while in court, he lied under oath about how the two had met. Browne told the court they had met while jogging in a London park, when in fact they had made contact through a male-escort agency’s website. Facing perjury accusations, the CEO made his exit — forfeiting a multi-million-dollar severance package in the process.
Kenneth Melani, Highmark
Image Source: bizjournals
Highmark is a health insurance company based in Pittsburgh and the largest health insurer in Pennsylvania, USA. At his peak in 2012, Melani was in charge of a Highmark that was $14.6 billion company and had millions of policyholders, for which he was paid $4 million annually. He suffered an overnight fall from grace on March 25, 2012 when he was arrested by Oakmont police after a fight with his mistress’s husband. He was charged with criminal trespass and simple assault and went on an unpaid leave of absence. On April 1, 2012, his employment with Highmark was terminated. Melani had been with Highmark for 22 years when his arrest following his extramarital affair got him fired and ruined his marriage.