CEO Sex Scandals: A Rogues' Gallery

CEOs are supposed to know when to say no. But when it comes to the temptation of having an adulterous affair, even some of the toughest-minded bosses just can't hold up a stop sign. A married CEO engaged in a sexual affair, or even one that merely appears to be sexual, jeopardizes not just his or her marriage and job (especially if the lover was a subordinate or a supplier), but can also put the whole company at risk. Still, many corporate chiefs are willing to take the chance.

Despite their elevated positions, CEOs are, after all, just like everyone else when it comes to carnal desire. Some fall head-over-heels for someone who is not their spouse. Others let their libido get the better of them. Passion can lead them to give little consideration to how their actions might affect their family or employer.

"No Secrets in Business"

But CEOs' sexual drive can have an extra element. Executive coach John Agno even has a pithy term for it: "CEO Disease."

"CEO-Diseased executives begin to feel they have the power to move beyond acceptable cultural borders (since those around them have decided not to tell them that their behavior is inappropriate), and eventually the executive gets caught -- since there really are no secrets in business," he writes in an email.

Consultant Leslie G. Mayer, who holds a doctorate in psychology and advises CEOs, tells DailyFinance that straying CEOs often justify their behavior by claiming that their spouses don't understand them, ignore them and focus on their children or their own interests.

"[The] CEO reports seeing 'great' potential in the person they have an affair with (this person 'looks up' to them, and the affair often starts with the CEO showing interest in helping them with their career)," Mayer writes in an email. The situation festers until the affair blows up, or the CEO's marriage does. Others end when the CEO's job falls into jeopardy or someone the boss respects confronts him abut it, she says.

What follows is a list of nine CEOs who crossed the invisible line that separates right from wrong.

Jack Welch -- CEO General Electric (GE)

In 2002, the man known as "Neutron Jack" fell in love with Suzy Wetlaufer, editor of the Harvard Business Review. The problem was that Welch was married to his wife Jane. His romance with Wetlaufer started when they collaborated on an article together.

It wasn't love at first sight. "When I first met Jack, I was terrified of him," Suzy Welch told 60 Minutes. Wetlaufer was forced to resign from the prestigious publication when word of her dalliance with Welch came out. She asked her bosses to spike her article when her relationship with Welch compromised her journalistic objectivity.

Jane Welch wound up getting her revenge. "When divorce negotiations stretched out, Jane Welch disclosed that Jack was getting sizable retirement perks from GE, including an apartment and the use of a GE jet. Welch agreed to pay $2 million a year for their use," according to USA Today.

The SEC later launched and then closed an investigation into the matter. Jack and Suzy Welch are living happily ever after, writing several books together, including Winning, and they co-host the Web-TV reality show It's Everybody's Business on Microsoft's (MSFT) MSN network.

Dov Charney -- CEO American Apparel (APP)

Dov Charney, a Canadian immigrant who dropped out of college in 1990, is living the American dream. Too bad it's turning into a nightmare for some of his employees.

Charney is a world-class weirdo. Among the proclivities he's fessed up to are walking around his office in his underwear. He's also the gift that keeps on giving to employment lawyers. The CEO has confessed to having numerous affairs with female subordinates and has been repeatedly sued for sexual harassment. Two women claimed in lawsuits that Charney exposed himself to them and masturbated in front of them. In 2005, three American Apparel employees filed suit against Charney for allegedly sexually harassing them at work.

His inability to learn what behavior is acceptable in the workplace and what isn't is breathtaking. For instance, Charney seemed not to understand that women may find the term "slut" offensive, explaining in a court deposition (via Dateline NBC): "You know, there are some of us that love sluts. You know, it's not necessarily -- it could be also be an endearing term."

HR World named the lawsuit among the top 20 sexual harassment claims of all time. The Bill Clinton-Monica Lewinsky case was No. 1.

Mark Hurd -- CEO Hewlett-Packard (HPQ)

Exactly what Mark Hurd did to lose his job running HP was never fully disclosed. Suffice it to say he crossed a line.

Hurd resigned on Aug. 6 amid allegations that he sexually harassed Jodie Fisher, a former actress and reality-TV personality who worked for HP as a marketing consultant. That claim was settled, and Fisher has denied having a sexual relationship with the married Hurd. To make matters even more confusing, an HP investigation found Hurd didn't violate the company's sexual harassment policies, although he did submit inaccurate expense reports to cover up his relationship with Fisher. Then why would Hurd bother to cheat his employer if he wasn't doing anything wrong?

"Hurd submitted receipts for expenses ranging from $1,000 to $20,000 over two years, including meals and travel, that should have been labeled as personal and not related to business, said a person familiar with the situation," according to Bloomberg News. What was included in the wining and dining was not immediately clear.

Oracle (ORCL) CEO Larry Elison rushed to Hurd's defense and hired him as co-president. "The HP board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago," the tart-tongued billionaire is quoted as saying.

Harry Stonecipher -- CEO Boeing (BA)

When Harry Stonecipher came out of retirement to head Boeing in 2003, he vowed to employees of the scandal-plagued aerospace company that its new code of conduct would apply to everyone, all 150,000 employees. In March 2005, Stonecipher was forced to resign after he admitted having an affair with a female Boeing executive later identified as Debra Peabody. In fact, Stonecipher and Peabody reportedly met when he signed the pledge. Joan Stonecipher, his wife of 50 years, filed for divorce after her husband's affair became public.

The timing couldn't have been worse. Fifteen months earlier, CEO Phil Condit was forced to resign after two Boeing executives were convicted in a military procurement scandal.

John Dodds -- CEO Kier Group(KIE)

In 2007, the U.K. construction company was rocked by an affair between married CEO John Dodds and Deena Mattar, the company's finance director. The reaction to the scandal was nothing like what would have happened in the U.S. For one thing, Dodds didn't lose his job, even though the media reaction was scathing after it was revealed that Mattar used Kier Group resources to remodel her home, The Daily Telegraph said.

Dodds retired this year at the age of 64, four years past the company's retirement age. He married Mattar and told the Telegraph he had no regrets. "Not one. It's all turned out exceedingly well," he is quoted as saying.
.
Mark McInnes -- CEO David Jones Ltd.

Australia's David Jones is what's called an upmarket retailer -- think of Down Under version of Bloomingdale's. At the helm for seven years was CEO Mark McInnes, until a sexual harassment complaint was brought against him by a 25-year-old female employee named Kristy Fraser-Kirk. McInnes, the complaint said, allegedly made unwanted sexual advances toward her. The executive quickly resigned and fessed up to behavior that "was unbecoming of the high standard expected of a chief executive officer to a female staff member." It was the first time that an Australian CEO resigned because of sexual harassment allegations.

In August, Fraser-Kirk filed a A$37 million sexual harassment lawsuit alleging that the board of David Jones knew that McInnes was a serial harasser and did nothing to stop him. Unflattering stories appeared in the press after the suit, Australia's largest sexual harassment case, was filed. Fraser-Kirk even offered to donate any punitive damage awards she received to charity. The case settled in October for A$850,000 with Fraser-Kirk declaring that she would be unable to keep her earlier promise.

Charles Phillips -- Oracle Co-President

Hell hath no fury like a woman scorned. Add to that wealth and computer savvy, and whomever is the object of the jilted woman's rage is in real trouble. Just ask Oracle Co-President Charles Phillips.

In January, YaVaughnie Wilkins decided not to get mad at Phillips after he broke off their eight-and-a-half-year-long relationship to patch things up with his wife. She got even.

Wilkins bought billboard ads in New York, Atlanta and San Francisco with pictures of her and Phillips snuggling, and her proclamation that the tech executive was her "soul mate." She even set up a website (no longer in operation) featuring pictures of her and Phillips.

But the media frenzy died down, and Phillips remains on the job.

Lord John Browne -- BP CEO

Lord John Browne was one of the world's most admired businessmen who few knew was a closeted homosexual. The head of BP was horrified to learn in 2007 that former lover Jeff Chevalier was trying to sell his story to a tabloid newspaper. He failed to block publication but said in court papers that the two met while exercising, even though the true story was that they met through a gay escort service named Suited and Booted.

Authorities decided not to pursue perjury charges, but Browne was forced to end his 40-year career. In his book Beyond Business, Browne admitted that he was wrong to lie about his relationship with Chevalier. No longer hiding his sexual orientation, Browne is now a senior partner with U.S. private equity firm Riverstone.

Steven J. Heyer -- CEO Starwood Hotels

In 2007, Starwood Hotels and Resorts Worldwide (HOT) and CEO Steven J. Heyer parted ways after it was uncovered that he sent "inappropriate and suggestive e-mails and text messages to a female employee," according to ABC News. He also had an "inappropriate physical encounter" with a woman outside a restaurant restroom. Heyer, who reportedly denied everything, was ratted out by an anonymous letter sent to the board of directors.

Still, Heyer was able to rebound. He's currently chairman and CEO of Harry & David Holdings. He's also lead director of Lazard Ltd. and is on the board of Omnicare (OCR).