In this Oct. 27, 2009 file photo, James Dimon, chairman and CEO of JP Morgan Chase Co., speaks in New York. JPMorgan Chase, the largest bank in the United States, on Thursday, May 10, 2012 said that it lost $2 billion in the past six weeks in a trading portfolio designed to hedge against risks the company takes with its own money.
Bosses may not be as immune to punishment as it once seemed.
Over the last few weeks, there have been a surprising number of high-profile firings related to screw-ups, poor performance and outright deception. At J.P. Morgan Chase, for example, chief investment officer Ina Drew recently stepped down for her role overseeing a $2.3 billion trading loss that has so far knocked about $17 billion off the bank's market value. Some critics are also calling for the departure of CEO Jamie Dimon, who has acknowledged mistakes that were "egregious" and "self-inflicted."
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At the electronics retailer Best Buy, the chairman recently resigned after an investigation found that he failed to stop an inappropriate relationship between the CEOâ€"who has also stepped down over the matterâ€"and a female employee. Yahoo CEO Scott Thompson resigned after the discovery that he embellished his academic credentials. And Chesapeake Energy CEO Aubrey McLendon has been removed as chairman of the firm he has dominated for years, following the disclosure of other big personal investments that may represent conflicts of interest. With the share price down 40 percent since March, McLendon's role as CEO is shaky as well.
Meanwhile, over in the U.K., the CEOs of Aviva, TrinityMirror and AstraZeneca have all been bounced after shareholders objected to fat pay packages that seemed excessive given lackluster performance.
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Some activists see a "shareholder spring" brewing, with business honchos finally becoming more accountable for what happens on their watch. The Yahoo shakeup, for example, was driven by a hedge fund that owns a 5.8 percent stake in the company and managed to claim three board seats in the bargain. "I think we do have something of a trend here," says Paul Hodgson of the corporate governance watchdog GMI Ratings. "It's by no means universal, but senior executives are waking up to the fact that responsibility is not just for other people."
That would be a welcome development. Over the last several years, controversial executives have largely escaped punishment for business decisions that nearly wrecked the economy, stoking record levels of mistrust in big business and other institutions. The former CEOs of Citigroup, Merrill Lynch and AIG, for example, left their firms in disastrous shape, yet walked away with nine-figure paydays. Compliant boards of directors at many companies merely rubber-stamped CEO prerogativesâ€"including lavish pay packagesâ€"instead of practicing the vigorous oversight they're supposed to.
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Placement firm Challenger, Gray Christmas, which tracks layoffs and firings, says 17 CEOs have been ousted so far this year amid scandal, accusations of impropriety or disagreements over business strategy. That's the same as at this point in 2011, and just a few heads higher than in 2010. So there may be rumblings in the boardroom, but no revolution just yet. The insurgents may still be mustering, however.
Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewmanÂ
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