washingtonpost.com  > Business > Industries > Transportation

Boeing CEO Resigns Over Affair With Subordinate

By Renae Merle
Washington Post Staff Writer
Tuesday, March 8, 2005; Page A01

Boeing Co. announced yesterday that it forced its chief executive to resign after an investigation uncovered that he had an affair with a female employee.

Harry C. Stonecipher, 68, had rejoined Boeing from retirement 15 months ago to help repair the aerospace giant's reputation after a string of military procurement scandals led to the resignation of his predecessor.

Harry C. Stonecipher, 68, returned to Boeing on the heels of scandal. (M. Spencer Green--AP)

_____Live Discussion_____
Transcript: Dr. Ken Siegel, psychologist and president of the Impact Group Inc., a psychologists' group that consults with business management, was online to discuss conduct and workplace issues in the business world in light of the Boeing incident.
_____Boeing Statement_____
Boeing CEO Harry Stonecipher Resigns; Board Appoints James Bell Interim President and CEO; Lew Platt to Expand Role (March 7, 2005)
_____Boeing (BA)_____
Latest Stock Quote
Company Profile
_____Recent Coverage_____
Boeing Hopes the Worst Is Over (The Washington Post, Feb 9, 2005)
Despite Scandals, Boeing Still Wins Wall Street's Favor (The Washington Post, Oct 28, 2004)

Boeing officials said Stonecipher's ouster was a sign that the company's board has little tolerance for missteps as it struggles to regain its place as a leading global corporation. The board used a code of conduct, adopted last year and proudly touted by Stonecipher as evidence of Boeing's progress, to dismiss him.

"It's not the fact that he was having an affair" that caused him to be fired, said Lewis E. Platt, Boeing's non-executive chairman. "But as we explored the circumstances surrounding the affair, we just thought there were some issues of poor judgment that . . . impaired his ability to lead going forward."

It was another embarrassing blow for Chicago-based Boeing, whose former chief financial officer Michael M. Sears was sentenced to four months in prison last month for illegally negotiating a job at the company for a former Air Force procurement official who admitted showing Boeing favoritism for years. Boeing promoted current finance chief James A. Bell to be interim chief executive and launched an accelerated search for a permanent replacement.

"In this environment, office romances have serious legal complications today that they didn't have 20 years ago," said Charles M. Elson, director of a corporate governance program at the University of Delaware. "It's not the relationship, it's the judgment that got you into the relationship that can get you into trouble."

Stonecipher, who had planned to step down next year as he turned 70, did not attempt to change the board's mind, company officials said. "He understands that he serves at the pleasure of the board. He stood fully ready to honor whatever decision was made," Platt said.

Boeing refused to name the female executive but said she has not been disciplined. A spokesman said there were no charges of sexual harassment. The woman did not work directly for Stonecipher, and he did not show her preferential treatment, company officials said. The executive is "several levels down in the company," Platt said.

Stonecipher, who is married, did not return calls for comment.

Platt said he learned about the affair Feb. 28 after receiving an anonymous tip that included evidence of communication between Stonecipher and the female executive. Platt said he approached Stonecipher with the allegations the next day.

CONTINUED    1 2    Next >

© 2005 The Washington Post Company