Dismissal May Spur New Exec Romance Rules

Times Staff Writers

The forced resignation of Boeing Co. Chief Executive Harry C. Stonecipher over an extramarital affair with an employee may signal an end to corporate America’s willingness to ignore the sexual indiscretions of its leaders.

But few experts in workplace law expect Boeing’s move to unleash a rash of firings at other companies. Instead, they said Monday, Stonecipher’s ouster probably will prompt boards to institute or redefine their rules for romantic relationships, possibly by requiring that executives disclose romances they’re having with subordinates. “If CEOs were knocked out for extramarital affairs, we’d have a major employment opportunity in the United States,” said Ellen Bravo, who conducts sexual harassment training for Milwaukee-based 9to5, National Assn. of Working Women. “There would be a lot of openings.”

At Boeing, consensual affairs between co-workers aren’t banned. Stonecipher, a married 68-year-old, began seeing a female employee in January, the company said. She didn’t report directly to him and didn’t benefit professionally or financially from the affair, and it didn’t affect the company’s “operational performance or financial condition,” Chairman Lewis Platt said. And Stonecipher admitted to the relationship when confronted by Platt.


“This is simply a relationship between two Boeing employees,” Platt said during a conference call with analysts and reporters.

Yet the company’s board decided that the relationship reflected poorly upon Stonecipher’s judgment. If brought to light, Platt said, certain details of the affair could hurt the company’s reputation, which Stonecipher was lured from retirement 15 months ago to repair.

Platt said Stonecipher violated a company rule that states, “Employees will not engage in conduct or activity that may raise questions as to the company’s honesty, impartiality, reputation or otherwise cause embarrassment to the company.”

Many CEOs have carried on affairs with employees without reproach from directors. Oracle Corp. Chairman and CEO Larry Ellison was famous for his active social life, at one point juggling dates with three employees simultaneously.

Former Enron Corp. CEO Kenneth L. Lay divorced his wife and married his secretary. Other CEOs have faced sexual harassment lawsuits and kept their jobs.

Boeing’s swift response -- Stonecipher lost his job 10 days after an anonymous tip from an employee prompted an internal investigation -- could signal that the personal lives of top executives are no longer off-limits when boards evaluate job performance.

Russell Conn, a Boston-based lawyer specializing in employment law, said that what Boeing did was part of a trend that started with the impeachment of President Clinton, who lied about an affair with White House intern Monica Lewinsky.

“There is going to be less and less tolerance for personal relationships and affairs, especially at the workplace level,” he said.

“There is no way it is in the best interest of the company to have their executives, especially a CEO, be involved in a personal relationship with a subordinate.”

Companies can’t prohibit their employees from falling in love, said Thomas Donaldson, director of the ethics and law program at the University of Pennsylvania’s Wharton School. But he thinks Boeing did the right thing, because allowing a married CEO to carry on with an employee would create too much potential for Stonecipher to abuse his power, and Boeing couldn’t take another scandal.

“We live in a period when the ethical sensors are way up,” Donaldson said.

“This guy didn’t steal from shareholders and employees. But if it’s definitely a violation of their code and culture, this is not a time period where that behavior is going to be given the benefit of the doubt.”