Why someone like the KB Home CEO could keep his job after a profane outburst

The CEO of major US homebuilder KB Home (KBH), Jeffrey Mezger, whipped up a mountain of negative press this week after he was caught on tape using homophobic and sexist slurs.

That tape probably garnered even more headlines than it usually would because Mezger was railing against his neighbor, and apparent nemesis, the comedian Kathy Griffin. In light of all of this negative press, one might assume that Mezger’s offensive rant jeopardized his job.

However, it’s not entirely clear that Mezger’s outburst was a career-ender. To be sure, Mezger didn’t simply lose his temper. He called Griffin a “bald d-ke” and a “c-nt” after she and her boyfriend called the police to report a noise disturbance coming from his Bel Air home. Griffin had reportedly shaved her head out of solidarity with her sister who died of cancer last week, making Mezger’s comments seem even more callous.

Still, as ugly as the Griffin dispute was, it may not end up hurting the company, and that’s the main question that will concern the board.

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Kathy Griffin through the years
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Kathy Griffin through the years
SANTA MONICA, CA - NOVEMBER 22: Comedian Kathy Griffin attends Fox's Cause For Paws: All Star Dog Spectacular at Barker Hangar on November 22, 2014 in Santa Monica, California. (Photo by Frederick M. Brown/Getty Images)
SANTA MONICA, CA - NOVEMBER 22: Comedian Kathy Griffin attends Fox's Cause For Paws: All Star Dog Spectacular at Barker Hangar on November 22, 2014 in Santa Monica, California. (Photo by Frederick M. Brown/Getty Images)
SANTA MONICA, CA - NOVEMBER 22: Comedian Kathy Griffin arrives at FOX's Cause For Paws: An All-Star Dog Spectacular at The Barker Hanger on November 22, 2014 in Santa Monica, California. (Photo by Amanda Edwards/WireImage)
SANTA MONICA, CA - NOVEMBER 22: Actress Kathy Griffin attends Fox's Cause For Paws: An All-Star Dog Spectacular at Barker Hangar on November 22, 2014 in Santa Monica, California. (Photo by David Livingston/Getty Images)
BEVERLY HILLS, CA - NOVEMBER 21: Emcee Kathy Griffin speaks onstage at Goldie Hawn's inaugural 'Love In For Kids' benefiting the Hawn Foundation's MindUp program transforming children's lives for greater success at Ron Burkle’s Green Acres Estate on November 21, 2014 in Beverly Hills, California. (Photo by Michael Buckner/Getty Images for The Hawn Foundation)
BEVERLY HILLS, CA - NOVEMBER 21: Emcee Kathy Griffin speaks at Goldie Hawn's inaugural 'Love In For Kids' benefiting the Hawn Foundation's MindUp program transforming children's lives for greater success at Ron Burkle’s Green Acres Estate on November 21, 2014 in Beverly Hills, California. (Photo by Michael Buckner/Getty Images for The Hawn Foundation)
NEW YORK, NY - NOVEMBER 19: Kathy Griffin attends the 2014 CNN Heroes: An All Star Tribute at American Museum of Natural History on November 18, 2014 in New York City. 25214_001_1185.JPG (Photo by Kevin Mazur/WireImage for CNN)
NEW YORK, NY - NOVEMBER 18: Kathy Griffin attends the 2014 CNN Heroes: An All-Star Tribute at the American Museum of Natural History on November 18, 2014 in New York City. (Photo by Andrew H. Walker/Getty Images)
NEW YORK, NY - NOVEMBER 18: Kathy Griffin speaks onstage during the 2014 CNN Heroes: An All Star Tribute at American Museum of Natural History on November 18, 2014 in New York City. 25214_002_1366.JPG (Photo by Dimitrios Kambouris/WireImage for CNN)
LOS ANGELES, CA - NOVEMBER 05: Comedian Kathy Griffin speaks at An Evening With Kathy Griffin at The GRAMMY Museum on November 5, 2014 in Los Angeles, California. (Photo by Duffy-Marie Arnoult/WireImage)
BEVERLY HILLS, CA - NOVEMBER 03: Host Kathy Griffin speaks onstage during The Equality Now's 'Make Equality Reality' Event at Montage Beverly Hills on November 3, 2014 in Beverly Hills, California. (Photo by Jonathan Leibson/Getty Images for Equality Now)
BEVERLY HILLS, CA - OCTOBER 14: Teri Hatcher and Kathy Griffin arrive at the 20th Annual Fulfillment Fund Stars Benefit Gala at The Beverly Hilton Hotel on October 14, 2014 in Beverly Hills, California. (Photo by Gregg DeGuire/WireImage)
BEVERLY HILLS, CA - OCTOBER 14: Kathy Griffin arrives at the 20th Annual Fulfillment Fund Stars Benefit Gala held at The Beverly Hilton Hotel on October 14, 2014 in Beverly Hills, California. (Photo by Michael Tran/FilmMagic)
BEVERLY HILLS, CA - OCTOBER 14: Actress Kathy Griffin attends the 20th Annual Fulfillment Fund Stars Benefit Gala held at the Beverly Hilton Hotel on October 14, 2014 in Beverly Hills, California. (Photo by Mark Davis/Getty Images)
BEVERLY HILLS, CA - OCTOBER 11: Kathy Griffin arrives at the 2014 Carousel Of Hope Ball Presented By Mercedes-Benz at The Beverly Hilton Hotel on October 11, 2014 in Beverly Hills, California. (Photo by Gregg DeGuire/WireImage)
TV personality Kathy Griffin arrives on the red carpet before the 2014 Best in Drag Show at the Orpheum Theatre in downtown Los Angeles on October 5, 2014. The show which sees contestants from all over the US raises money for the Aid for AIDS and Alliance for Housing and Healing charities. AFP PHOTO/Mark RALSTON (Photo credit should read MARK RALSTON/AFP/Getty Images)
TIBURON, CA - AUGUST 23: Kathy Griffin emcees the 3rd Annual Hotbed Benefit hosted by the Drever Family Foundation on August 23, 2014 in Tiburon, California. (Photo by Steve Jennings/Getty Images)
TIBURON, CA - AUGUST 23: Kathy Griffin emcees the 3rd Annual Hotbed Benefit hosted by the Drever Family Foundation on August 23, 2014 in Tiburon, California. (Photo by Steve Jennings/Getty Images)
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‘Does a controversy involving him affect the company itself?’

“The question is, does a controversy involving him affect the company itself?” said Charles Elson, the director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “They’ll look at, ‘Has the market reacted negatively to it? … It may not impact it at all.”

KB Home may be particularly suited to weather a public-relations storm like this one, as it’s not a very well-known consumer-facing brand and hasn’t been embroiled in other high-profile controversies. In the day after the Kathy Griffin story broke, the stock fell by a modest 2%.

It’s unlikely the board would fire Mezger over this, according to Bruce Kogut, director of the Sanford C. Bernstein & Co. Center for Leadership and Ethics at Columbia University’s Business School.

“I doubt if the board would take action on this event, unless it’s part of a longer negative narrative or a stressful time for the CEO,” Kogut told Yahoo Finance in an email. “A good board however will surely engage the CEO on the behavior and will suggest actions, such as a coach or counselor, to help the CEO to stay on course.”

Mezger’s track record at KB Home will help determine his survival there, Kogut said. He noted that “a lot of CEOs have acted beastly at times,” though he acknowledged that the pressure in this case could be amplified amid an atmosphere of lower tolerance for this kind of behavior.

A long history of loud-mouthed CEOs

Indeed, Mezger is far from the first business leader whose temper has erupted in a loud and public fashion. Former Enron CEO Jeffrey Skilling infamously called a fund manager an “a–hole” on a recorded conference call back in 2001. Five years later, business-media darling Mark Cuban got fined $250,000 for outbursts after Game 5 of the NBA finals.

Meanwhile, Ted Turner managed to stay vice chairman of Time Warner (and then AOL Time Warner) from 1996 to 2003 while maintaining his reputation as “the mouth from the South.”

More recently, former Uber CEO Travis Kalanick got caught on tape berating an Uber driver. Even after that incident and a few other scandals, Uber’s board gave him their full support. While he eventually resigned under duress, Margarethe Wiersema, a professor at the business school at the University of California, Irvine, pointed out that the outburst alone was not the reason for his removal.

Still, Kalanick’s behavior appeared to be part of a pattern. In the case of Mezger, he’ll likely have to rein in his actions in the future.

“If the CEO has another blow out – I am not so sure that they [the board] will be as forgiving,” said Wiersema, whose specialties include CEO replacement. “He has been once warned.”

Erin Fuchs is deputy managing editor at Yahoo Finance.

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