March 7, 2005
Look What Sarbanes-Oxley Has Wrought
The Sarbanes-Oxley Act requires corporate counsel and directors to investigate all reports of potential wrongdoing at a corporation, and an anonymous tip appears to have led to the removal of Boeing CEO Harry Stonecipher because he was having an affair with another Boeing executive. A press release issued by the company (here) discusses an investigation of Stonecipher by inside and outside cousnel that led to the Board's decision to fire him:
The Board actions were taken following an investigation by internal and external legal counsel of the facts and circumstances surrounding a personal relationship between Stonecipher and a female executive of the company who did not report directly to him. The Board determined that his actions were inconsistent with Boeing’s Code of Conduct.“ The Board concluded that the facts reflected poorly on Harry’s judgment and would impair his ability to lead the company,” said Platt.
Stonecipher will no doubt receive a nice severance package, although the assertion that the other excutive did not report to him "directly" seems a bit disingenuous -- doesn't everyone report to the CEO? Stonecipher's demise probably is not nearly as damaging to the company as the firing of his predecessor, Phil Condit, because of the scandel involving the aborted hiring of former Air Force procurement chief Darleen Druyun in 2003. Moreover, the Pentagon's suspension of Boeing from bidding on rocket contracts because of its misuse of information from Lockheed Martin was lifted just last week. At least the company is finding new ways to act improperly. (ph)
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