Eight Boneheaded Blunders by America's Biggest CEOs
Emboldened by hubris or just a momentary lapse of judgment, some CEOs risk their careers -- or the share price of their company's stock -- by going off-script, while others make prognostications that months later prove to be far from the truth.
24/7 Wall Street combed through the proclamations and comments of Corporate America's fearless leaders to find the cream of the crop when it comes to putting one's foot in one's mouth. In each of these cases, it seems pretty evident that the executives who uttered these statements wish they could take them back.
1. Google's not a real company. It's a house of cards.
-- Steve Ballmer, CEO of Microsoft (MSFT)
Allegedly, Ballmer made this statement upon learning that engineer Kai-Fu Lee was leaving Microsoft in order to join Google (GOOG). Microsoft sued Google over the hiring, arguing that it was in violation of Lee's noncompete agreement. In a legal document used in the lawsuit, another engineer named Mark Lucovsky recounted Ballmer's words when he decided to defect from Microsoft for Google in 2004.
Looking back, Ballmer demonstrated a comical level of ignorance. Google has crushed Microsoft in both the search and mobile software businesses, and its stock is up 60% over the past five years. Microsoft's stock, meanwhile, is down 3%.
2. Bear Stearns's balance sheet, liquidity and capital remain strong... Our liquidity position has not changed at all, our balance sheet has not changed at all...
-- Alan Schwartz, former CEO of Bear Stearns
The former CEO of defunct investment bank Bear Stearns was whistling past the graveyard in March 2008 when he stated (with apparent self-delusion) that things were going to be alright at the faltering investment bank. Less than two days after Schwartz spoke these words, Bear Stearns filed for bankruptcy.
3. With our ongoing focus on innovation and execution, we have the experience to realize the full potential of the brand and achieve sustainable growth and shareholder value well into the future.
-- Jim Donald, former CEO of Starbucks (SBUX)
In 2006, business was good for Starbucks. It was going so well, in fact, that former CEO Jim Donald set forth a new goal for the company: to open and operate a total of 40,000 stores worldwide, essentially overtaking McDonald's (MCD) title of world's largest food chain. At the time, the company had 12,440 stores. Unfortunately, business took a nosedive in 2007, and by July 2008 Starbucks was forced to close 600 stores and lay off 12,000 people. Donald was asked to step down earlier that year.
4. We have no thoughts of [bankruptcy] whatsoever.
-- Rick Wagoner, former CEO of General Motors
The blind optimism displayed by Rick Wagoner during a July 2008 business organization meeting in Dallas left him in an embarrassing position. The statement followed news that General Motors had turned a quarterly profit after six consecutive quarterly losses, a positive moment that any CEO would understandably like to emphasize. However, considering that Wagoner oversaw more than $85 billion in losses and that the company would file for bankruptcy only one year later, his confidence seems misplaced. Nine months after he uttered these words, the Obama Administration asked Wagoner to step down.
5. Google is going to have a problem because Google is only known for search...
-- Carol Bartz, CEO of Yahoo! (YHOO)
Perhaps Yahoo CEO Carol Bartz didn't fully think her words through before making this May 2010 statement about the uncertainty of Google's future to BBC News reporter Jonathan Fildes. It may just be a case of sour grapes: Yahoo was supplanted by Google as the No. 1 search company years ago. Consequently, over the last five years, Yahoo's stock price is down 57%, and Google's is up 60%. When it comes to search engines expanding their services beyond their primary business, Google is overwhelmingly considered the standard of progress. Just take one look at Google's dominance in the mobile market after its introduction of Android two years ago and the evidence is clear.
6. There's no one who wants this over more than I do. I'd like my life back.
-- Tony Hayward, former CEO of BP (BP)
Few companies have invoked the levels of public outrage that BP did in the wake of the April 20, 2010, Gulf oil spill. This anger was further magnified by the oil giant's emotionally -detached leadership, exemplified on May 31, when CEO Tony Hayward issued the self-centered proclamation that he would "like [his] life back." When one's company is responsible for an accident that causes the deaths of 11 workers and extensive environmental damage, talk of personal woe is neither of importance nor general interest. Hayward announced his resignation on July 27.
7. What is really hardest for me to explain is this: HP is a company that has consistently earned recognition for our adherence to standards of ethics, privacy and corporate responsibility. And yet these practices that we have taken such pride in have recently been violated by people inside the company and by people outside the company whom we hired.
-- Mark Hurd, former CEO of Hewlett-Packard (HPQ)
Hurd made these statements on Sept. 28, 2006, as part of his congressional testimony regarding an investigation into whether HP Chairwoman Patricia Dunn had hired private investigators to spy on board members and journalists. Four years later, Hurd was in the crosshairs of the ethics police. The CEO resigned amid accusations that he sexually harassed a contractor and after an investigation uncovered inconsistencies in his expense account. "As the investigation progressed, I realized there were instances in which I did not live up to the standards and principles of trust, respect and integrity that I have espoused at HP and which have guided me throughout my career. After a number of discussions with members of the board, I will move aside and the board will search for new leadership," Hurd said when he announced his resignation.
8. I need to convince all constituencies we have that we are really a company with high integrity, our people have great ethical values and behave that way.
-- Harry Stonecipher, former CEO of Boeing (BA)
Harry Stonecipher came out of retirement in 2004 after a series of scandals wracked Boeing's reputation as an honest company, including accusations that Boeing executives had stolen U.S. government secrets and overcharged the government for vehicles and equipment. Yet, Stonecipher found a new way of tarnishing the aviation manufacturer's reputation by having an affair with a female subordinate. He resigned in March 2005, a little more than a year after assuming his role as "chief ethicist."