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When CEOs misstep, boards of directors often act as judge, jury

Best Buy CEO Brian Dunn resigned this week after 28 years at the electronics retailer in the wake of an internal investigation into his “personal conduct.”

Getty Images (2009)

Best Buy CEO Brian Dunn resigned this week after 28 years at the electronics retailer in the wake of an internal investigation into his “personal conduct.”

NEW YORK — Innocent until proven guilty? Maybe not, if the defendant is a CEO and the jury is a company's board of directors.

Best Buy CEO Brian Dunn resigned this week after the retailer's board launched an investigation into his "personal conduct." The 28-year Best Buy veteran joins a list of big-name CEOs who stepped down or were fired after getting into trouble for their actions outside of the corner office. The alleged offenses have varied widely, from lying to cheating, and so have the punishments.

Some wound up leaving their companies with a golden parachute. Mark Hurd, former CEO of Hewlett-Packard for instance, resigned and received a severance package worth $30 million after an internal investigation by the company uncovered some expense account irregularities.

Others, like business magnate Martha Stewart, suffered more severe consequences. Stewart was forced to resign from her namesake media empire and spent five months in a West Virginia jail after being convicted of lying to federal prosecutors about an illegal sale she made of another company's shares.

Best Buy has not given details about the circumstances surrounding the Dunn investigation, but Ron Hutcheson, a spokesman for the board of the nation's largest consumer electronics retailer, said the "findings will be made public and appropriate action will be taken if warranted."

MARTHA STEWART, FORMER CEO AND CHAIRWOMAN OF MARTHA STEWART LIVING OMNIMEDIA

What happened: The government launched an investigation into lifestyle and home guru Martha Stewart's sale of shares in biopharmaceutical company ImClone Systems in 2001, the day before the Food and Drug Administration announced it declined to review an ImClone application for a cancer drug. By selling nearly 4,000 ImClone shares, she avoided a loss of more than $45,000, the government said.

The result: Stewart was indicted by the government on nine counts, including charges that she lied to prosecutors about her well-timed sale. The day after, Stewart stepped down as CEO and chairwoman of her company, Martha Steward Living Omnimedia Inc., but remained chief creative officer.

Stewart was found guilty of obstructing justice and lying to the government about why she unloaded ImClone stock. She was sentenced in 2004 to serve five months in jail.

RANDY MICHAELS, FORMER TRIBUNE CO. CEO

What happened: The Tribune Co., which owns the Chicago Tribune, Los Angeles Times and other newspapers, started an inquiry of Michaels' conduct in 2010 after an unflattering portrait of his management style appeared in the New York Times. The story likened Michaels to a ringleader of a college fraternity house and asserted that Michaels helped cultivate a culture filled with profanity, poker parties and other bawdy behavior.

Then, one of Michaels' top executives emailed an internal memo to employees with an Internet link featuring a racy video that included a bare-chested woman pouring booze down her torso.

The result: Michaels resigned two weeks after the article ran. Lee Abrams, the executive who sent the racy memo, also resigned.

Michaels demanded to be paid a $900,000 bonus when he left, arguing that his resignation was tantamount to being fired because he was pressured to step down. Thirteen months after his departure, the company agreed to pay the former CEO up to $725,000 to settle the dispute.

MARK HURD, FORMER CEO OF HEWLETT-PACKARD

What happened: In late June 2010, prominent lawyer Gloria Allred, on behalf of former marketing contractor Jodie Fisher, sent a letter accusing Hurd and the company of sexual harassment. An investigation ensued, but the company found no merit to her claims.

Through the course of the investigation, though, HP said it discovered that Hurd had falsified some reports to disguise some expenses he incurred that ranged in price from $1,000 to $20,000 each for meals and for travel with Fisher.

The result: Both Hurd and Fisher said the relationship was not sexual. Hurd also insisted that the expenses he reported were for legitimate business purposes and offered to pay for expenses that were incorrectly filed. Still, Hurd resigned in August 2010, a few weeks after the inquiry began, and settled with Fisher for an undisclosed sum.

When CEOs misstep, boards of directors often act as judge, jury 04/13/12 [Last modified: Friday, April 13, 2012 10:34pm]
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