The financial crisis exposed, and in some cases led to, some remarkable examples of poor judgment by top chief executives. But this year as the economy has improved, so has CEO behavior — somewhat. No one claimed to be doing "God's work" in 2010 (cue Lloyd Blankfein) or invented 10,000 fictitious employees (Satyam Computer Services' B. Ramalinga Raju). But together chief executives made enough massive PR blunders — and engaged in enough dirty dealings — to remind us forcefully of their fallibility.
With the disclaimer that all parties are innocent of actual crimes until proven guilty, here are the biggest CEO screw-ups of 2010. In honor of the holiday spirit, we're choosing them now, and letting off anyone caught in December.
Notable ex-CEOs occupy the bottom two spots on our list, thanks to gaffes they made while running for public office. California senatorial candidate and former Hewlett-Packard Chief Executive Carly Fiorina was prepping for a TV interview when a live microphone caught her mocking her opponent Barbara Boxer's hair. ("God, what is that hair? So yesterday!") That didn't help Fiorina's campaign at all. On the other coast, Connecticut gubernatorial candidate Linda McMahon, who once ran World Wrestling Entertainment, admitted that she didn't know whether WWE paid any of its employees minimum wage, or even what Connecticut's minimum wage was. Neither of those two candidates won her race.
The FBI began investigating Michael Lyon, the now ex-chief executive of Lyon Real Estate in Sacramento, Calif., as he was undergoing a messy divorce from his second wife. Lyon had allegedly secretly recorded people in his homes. In August the U.S. attorney's office announced it was closing its 16-month probe, citing a lack of evidence. But the Sacramento County sheriff's and district attorney's offices decided to pick up where the Feds left off, launching their own investigation to determine whether he had broken any state laws. In late August Lyon announced that he was temporarily stepping down from the top spot at the company, which his father founded in 1946, and in November he was arrested for allegedly making surreptitious videos of sex acts with women, at least one of them an "escort," in his home. He is currently free on bail.
Sleuthing is encouraged at Locateplus, a Beverly, Mass., outfit that provides access to all kinds of public data, like real estate and telephone records. Earlier this month Jon Latorella, the company's now-ex CEO, was indicted on charges of securities fraud, filing false statements to the company's auditor and the Securities Exchange Commission, aggravated theft and other charges. The indictment alleges that Latorella and his former chief financial officer carried out several fraudulent schemes in order to artificially inflate the company's revenues. The most bizarre charge against the duo is that they used the identity of someone who died in 1985 to invent both a business executive who worked with Locateplus and an investor in a company the two men controlled. The men haven't yet had an initial court appearance. Of course they must be presumed innocent until found guilty, but just bringing on such an indictment has to be considered a major screw-up.
Timothy Huff, who ran GlobeTel Communications, a telecom business in Fort Lauderdale, Fla., is another chief executive with a vivid imagination. In July Huff was sentenced to 50 months in prison followed by three years of supervised release after pleading guilty to charges of conspiracy to commit securities fraud and to defraud the U.S., the Treasury Department and the Internal Revenue Service. For three years beginning in 2002 Huff conspired with GlobeTel's CFO to create fake revenue and then reported that revenue on the company's books and in its SEC filings. Huff and his CFO fabricated invoices and documents to back up the fictitious revenue that the company was reporting. Thomas Jimenez, the CFO, pleaded guilty and is serving a sentence.
Bogus expense records — and, presumably, the threat of a PR disaster — led to Mark Hurd’s forced resignation from Hewlett-Packard in August. HP's board ousted Hurd after he filed, or had someone file, inaccurate expense reports that HP believes were intended to conceal the extent of his relationship with a female contractor. The woman's lawyer had contacted HP in June, charging Hurd with sexual harassment. (An independent investigation by HP found no merit to the sexual harassment claim.) Directors discovered the expense reports while investigating that charge, and then pressed Hurd to step down.
Pity the poor CEO whose personal time is cut short when his company is responsible for an environmental catastrophe. Or don't pity him. BP Chief Executive Tony Hayward displayed a shocking lack of empathy — and a propensity for public gaffes — while the Deepwater Horizon rig was spilling millions of barrels of oil into the Gulf of Mexico. Hayward told The Guardian newspaper that the Gulf is a "very big ocean" and the TODAY show that "I'd like my life back," and he attended a regatta on the Isle of Wight two days after being questioned by a U.S. congressional committee. Hayward easily nails the prize for the biggest CEO screw-up of all in 2010.
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