Stritzke’s fate shows shrinking error margin for CEO behaviour

HAVING a consensual relationship with an employee or an outside client is seen as a no-no for CEOs at many businesses. Not disclosing it to the board – especially in today’s era of emphasis on executive integrity and zero tolerance for misbehaviour – can be worse, as REI CEO Jerry Stritzke has learned.

Outdoor apparel and gear retailer REI said Tuesday that Stritzke had resigned and would leave the co- op Mar 15 after a board investigation found that the relationship between him and “the leader of another organisation in the outdoor industry” had not been disclosed.

While the investigation found no fi nancial misconduct resulted from the relationship, “the facts led to a perceived confl ict of interest,” board Chairman Steve Hooper wrote in a letter to employees, “which he should have disclosed under the REI confl ict of interest policy, which requires every REI executive to model the highest standard of conduct.”

Stritzke’s resignation comes about seven months after Intel CEO Brian Krzanich stepped down for violating a “nonfraternisation” policy by having a consensual relationship with another employee. The CEOs of two other tech fi rms, Rambus and Texas Instruments, also departed last summer after unspecified conduct issues that either “fell short of the company’s standards” or violated the code of conduct via personal behaviour inconsistent with “our ethics and core values.” In December, the CEO of electronic component supplier Kemet departed following an investigation into “a consensual personal relationship” the company said was inconsistent with Kemet’s policies.

Whatever the reason for the departure, employment lawyers say boards of directors at many companies – though certainly not all – are quicker to act in an era of increased media coverage about CEO transgressions, # metoo misconduct that increases scrutiny of even consensual relationships and more demands on boards to hold CEOs accountable for risky behaviour.

“Companies are expecting candour, and they’re expecting the highest degree of transparency from CEOs,” said Julie Moore, an employment lawyer whose fi rm, Employment Practices Group, does investigations on workplace misbehaviour. — WP-Bloomberg