CEO Gaffe of the Week: Westgate Resorts

This year, I introduced a weekly series called "CEO Gaffe of the Week." Having come across more than a handful of questionable executive decisions last year when compiling my list of the worst CEOs of 2011, I thought it could be a learning experience for all of us if I pointed out apparent gaffes as they occur. Trusting your investments begins with trusting the leadership at the top -- and with leaders like these on your side, sometimes you don't need enemies!

This week I'm going to step out of the box of publicly traded companies and highlight what I feel is a particularly notable "He said what?" moment from David Siegel, CEO of privately held Westgate Resorts.

The dunce cap
Under normal circumstances I try to focus on CEO gaffes wholly within the realm of publicly traded companies, but David Siegel is truly something special. His company, Westgate Resorts, operates 28 full-service luxury resorts throughout the United States. As you might imagine, the recession took a huge toll on the resort sector. For Westgate Resorts, that meant reducing headcount by 7,000 employees to just 5,000 in total as revenue plunged about 50% from historic 2007 levels.

However, business has slowly crept back over the past three years, and Westgate is now employing roughly 2,000 more employees than it was in 2009. But that could all come to a crashing halt according to David Siegel...

Siegel sent out a private memo to all 7,000-some Westgate employees earlier this month detailing how President Obama is taxing him and his company to the max, and that another four years of an Obama presidency simply couldn't be tolerated. While the message came across as a near threat to vote for anyone but President Obama, the perceived threat from the memo was Siegel's warning that if Obama is reelected, it could result in another round of layoffs. Essentially, a vote for Obama is a vote to lay more people off at Westgate Resorts. You can read the actual memo sent to Westgate employees by clicking here (link opens PDF).

What makes the situation even odder is that aside from the using workers' jobs as leverage to gain their vote (something Siegel has denied but seems to me to be blatantly obvious), Siegel is also constructing the largest private residence in the United States. That's right; the CEO who is griping about being taxed to death and threatens to announce another round of layoffs if President Obama is reelected is constructing a 90,000 square foot home and may be forced to halt its construction for a second time if his taxes go up. Wait... where's my Kleenex?

To the corner, Mr. Siegel...
This is so ridiculous on such a multitude of levels I don't even know where to begin. We may all have our personal political leanings, but coercing a vote through your position as a CEO and threatening to let people go if President Obama wins reelection is not the way of going about things.

The president's landmark health-care legislation, the Affordable Care Act, threatens to raise health-care costs and expenses for many large corporations, but you don't see them sending out memos to their employees! Some, like telecom giants AT&T (NYS: T) and Verizon, as well as stationary company 3M (NYS: MMM) have responded by taking hefty, one-time non-cash write-offs and threatened to reduce health-care benefits to retired and existing employees due to the removal of a key Medicare tax benefit in the ACA. Medical device maker NuVasive (NAS: NUVA) has warned of significant layoffs due to the medical device excise tax, while medical equipment supplier Stryker (NYS: SYK) has already shaved 5% of its workforce in response to the bill.

These actions are tangible expressions of the uncertainties of President Obama's soon-to-be-enacted health-care policies, but never before have I seen a CEO like Siegel so intent on conveying his discontent for a Presidential candidate so as to dangle his workers' jobs out as a carrot to coerce their vote; and not only that, but to do it while constructing a 90,000 square foot home is just shameful. I wag my finger in disdain at you David Siegel.

Do you have a CEO you'd like to nominate for this dubious honor? Shoot me an email and a one- or two-sentence description of why your choice deserves next week's nomination, and you just may see your suggestion in the spotlight.

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Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Motley Fool newsletter services have recommended buying shares of, and creating a diagonal call position in, 3M. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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