October 25, 2005
Your CEO Bills $241,000 at a Strip Club; What Does a Board Do?
The board of directors of Savvis Inc., a St. Louis based company, faced an unusual public relations problem. The CEO, Mr. McCormick, refused to pay a $241,000 bill from American Express for charges incurred over one night at a Manhattan strip club, Scores. Mr. McCormick claims he owes only $20,000. Apparently he enjoyed the benefits of the "President's Room." Mr. McCormick did not submit any part of the bill to the company for reimbursement. Apparently, strip clubs are gaining popularity, behind golf courses, ski slopes and ball games, as entertainment venues for negotiating business deals and entertaining business clients. What did the board do? Suspended the CEO without pay pending an investigation. What are they investigating? Whether any illegal payments were involved? If none were and the payments were all for drinks and dances, then what? If for a business deal should the board fire the CEO for poor business judgment? If not for a business deal (it was entirely personal) should the board fire the CEO for boorishness? [In Quebec, the revelation would make you a front runner for the Parti Quebecois. leadership. here] Stay tuned.
We will no doubt soon see the case in a Harvard Business School case study in ethics.
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