Executives' Privilege? In Boardroom,
Sex Seldom Leads to Censure
Washington Post Staff Writers
Wednesday, September 16, 1998; Page A01
During their nightly mastication of the Clinton sex scandal, one army of TV pundits argues that a business executive or academic leader who behaved as the president did would be terminated immediately.
Shouts from the other side ensue: No, they say, Clinton is being singled out for punishment as no corporate chief would be.
In fact, corporate bosses typically are forgiven for questionable sexual behavior, according to lawyers and management experts who specialize in harassment and seduction cases.
College presidents are more likely to be disciplined or removed because parents who pay tuition bills are more sensitive to sexual misdeeds that affect students than customers and stockholders are to corporate mischief, educational administrators said.
In Corporate America and on college campuses, consensual relationships are usually considered private. And when sexual misdeeds rise to the level of harassment, executives often get away with the same kind of behavior that changing mores have turned into a firing offense for workers lower down the food chain.
Although thousands of sexual harassment lawsuits have been filed nationwide, many including allegations of egregious misbehavior at top management levels, only a handful of chief executives have been dismissed as a result.
Independent counsel Kenneth W. Starr's report on the president's behavior chronicles a consensual relationship with Monica S. Lewinsky and refers to allegations by Paula Corbin Jones and other women of unwanted advances by Clinton. In the corporate world, the distinction between consensual sex and harassment remains an essential divide, according to experts in the booming field of sexual harassment consulting.
Consensual sexual relationships between powerful older men and ambitious younger women are commonplace, but management experts are increasingly critical of liaisons involving top executives and subordinates, saying they hurt morale and can end sourly amid charges of sexual harassment or perceived favoritism.
Nonetheless, experts concede, such affairs are almost impossible to stamp out for deep-rooted biological, social and financial reasons.
"I don't know of any situation where there has been an extramarital affair, that is consensual and kept from the public, where it's been deemed inappropriate conduct for a leader," said Freada Klein, a consultant on sexual harassment.
And when the sexual behavior is consensual, typically between older, powerful men and beautiful, young subordinate females, married or unmarried, men are often accorded boasting rights, not shame or humiliation. They are rarely fired.
"Based on what we've seen, with rare exceptions, nothing happens to the CEO," said Ellen Bravo, executive director of 9to5, National Association of Working Women, which tracks corporate sexual misbehavior cases. "He's too important. He's what we call an 'UGLI' -- an Untouchable, God-Like Individual."
James "Bo" Bolus, a Louisville employment lawyer who has brought more than 100 sexual harassment cases, said companies almost never terminate a top executive for sexual misbehavior, no matter how serious. "I've never seen a single CEO lose his job," he said.
Sexual involvement with a subordinate can add to an executive's mystique. One of the most envied men in Silicon Valley is Larry Ellison, 54, chief executive of Oracle Corp., one of the richest men in California. He's the thrice-married Lothario of the pocket-protector set, frequently attending business events with a beautiful young subordinate on his arm. Some of his relationships have been with recent Stanford University alumnae in their first real jobs.
In his 1997 book, "The Difference Between God and Larry Ellison (God Doesn't Think He's Larry Ellison)," St. Petersburg Times reporter Mike Wilson described Ellison conducting simultaneous romantic relationships with as many as three female employees. That sometimes created confusion -- Ellison openly described to Wilson an incident in which a woman employee arrived at the executive's house one night, only to find another girlfriend-employee there.
Ellison's most notorious romance ended up in court. A relationship bloomed when a junior-level marketing employee named Adelyn Lee encountered the boss in the elevator and asked him for a ride in his Ferrari, according to court testimony. Ellison offered, via e-mail, to let her drive. After 18 months, the relationship soured. Lee was then fired. She sued the company for wrongful termination and obtained a settlement, but was later jailed over allegations that she doctored e-mail messages she had used to bolster her claims.
Ellison has suffered no apparent repercussions from his behavior, and remains widely respected for his innovations in the computer industry. Oracle representatives declined to comment.
Tobacco giant Philip Morris Cos. enjoys a reputation for good management, but in a 1996 sexual harassment trial involving behavior at the company's cigarette plant in Louisville, the company conceded that extramarital hanky-panky had occurred.
Attorneys for the women bringing suit contended that widespread romantic liaisons between top executives at the plant and their female subordinates created an atmosphere in which low-level male workers felt similarly invited to request sexual favors. The lawyers presented evidence that at least 13 romantic liaisons occurred between top managers and lower-level female employees, including an incident in which one woman arrived at a plant manager's house in the morning as another came down the stairs in a negligee.
Philip Morris attorney Douglas Becker said in his opening statement that the company does not prohibit interoffice relationships. "Now you might say that's not a good business practice, and maybe not," he said. "That's the way we run our business."
Even costly sexual harassment lawsuits don't seem to unseat executives. For decades, Dan Wassong, chief executive of Long Island-based Del Laboratories Inc., was known inside the cosmetics maker for his unusually aggressive personal manner. In 1992, three secretaries filed a sexual harassment complaint with the U.S. Equal Employment Opportunity Commission, alleging Wassong had used foul language to them, worked in his underwear in front of them, urinated with the door open or hit them. Fifteen more former Wassong secretaries gave the EEOC similar accounts, and about two dozen more women told investigators about conduct over three decades.
In 1995, Del Labs paid $1.2 million to settle the case, then the largest such sexual harassment settlement ever negotiated by the EEOC. Wassong did not admit wrongdoing and his lawyer, Mark Dichter, has said Wassong "emphatically denies the allegations of these women."
Wassong remains head of the company.
Similarly, Milan Panic, chairman and chief executive of California-based ICN Pharmaceuticals Inc., has faced harassment lawsuits, but his board continues to support him. He has settled several lawsuits while denying wrongdoing. He faces another civil trial in October. Panic has conceded he had relationships with employees but said they were consensual.
What insulates executives who cross the line and escape without consequences? Workplace experts say some of them control large blocks of stock, making it hard to remove them without inciting the corporate equivalent of civil war. They also typically control their boards of directors, appointing people likely to support them no matter what.
Klein said that many board members have told her about top executives who flaunted their sexual indiscretions, for example, showing up at board meetings accompanied by a mistress and later leaving with her in a company car. The management consultant said board members typically tell her they knew it was happening but decided it was private behavior -- "none of their business."
"When CEOs are behaving badly sexually, but they are meeting their profit-and-loss numbers and shareholders are happy, then it is not thought to be important behavior," Klein said. "If it doesn't become public, it is handled in a wink-wink, nod-nod, look-the-other-way fashion."
Bolus said many executives dodge the bullet through prevarication. "They always deny it," the lawyer said. "They lie every day in court. They lie so their families won't find out."
Those executives who do get the ax for sexual misbehavior usually fall because they were otherwise in trouble, either inside the company or with the law.
It takes "some other rumbling," combined with poor stock performance or other management problems, Klein said, to spur a company to remove its highest executives.
At Astra USA Inc., for example, there were widespread allegations of compulsory socializing between attractive saleswomen and their supervisors at the drug company. But the end came for Lars Bildman, its U.S. president and chief executive, when he was also questioned about diverting company money for personal expenses, including vacations and renovations to his homes in Massachusetts and Vermont. The company's Swedish parent company first suspended and then fired him. In January, Bildman pleaded guilty to criminal charges of income tax fraud and agreed to serve a 21-month jail term.
At W.R. Grace Co. Inc., a packaging and chemicals conglomerate, chief executive J.R. Bolduc, longtime protege of chairman J. Peter Grace Jr., was forced out of his job in 1995 because, the company said, he had sexually harassed several female employees.
Published reports quoted Grace employees as saying that Bolduc frequently made sexual jokes, nibbled on women workers' ears, patted their buttocks and licked his fingers and put them in their ears. A Wall Street Journal story then reported that when Bolduc visited far-flung facilities, women workers would call in sick to avoid him. Bolduc has denied he sexually harassed women.
But few observers believed sexual harassment was the sole cause of Bolduc's fall from grace because the company had long condoned bawdy and off-color humor. The Hoover Handbook of American Business now calls Bolduc's forced departure "only one scene in a long-running soap opera of boardroom power plays and revolts." Just before he was removed, Bolduc had fired Grace's son and was pressuring Grace to step down as chairman, according to published reports.
Some shareholders subsequently protested Grace's decision to give Bolduc a severance package estimated at $20 million.
Sexual misconduct in the academic world is often dealt with more harshly. Public universities are also more sensitive to such complaints because their funding comes from legislators who will hear about the controversies from their constituents.
Richard E. Berendzen was forced to resign as president of American University in 1990 after women who received obscene calls complained to police, who traced the calls to Berendzen's office. The physicist remains on the AU faculty.
Similarly, Leon Howard, president of Alabama State University, resigned in 1989 after being indicted for the attempted rape of a university staff member and pleading guilty to a lesser charge, "harassing communications."
Steven Altman, president of the University of Central Florida, resigned in 1991 after it was reported that, while traveling on official business, he used an escort service linked to prostitution. Altman said the incident had been "blown out of proportion" and that he had resigned for the good of the university.
"It is my sense that the public sector is much less forgiving on something like this," said Edward Elmendorf, vice president for government relations and policy analysis at the American Association of State Colleges and Universities.
Bernice Sandler, author of "Sexual Harassment on Campus" and an expert witness in 20 academic sexual harassment cases, disagreed, saying sexual misbehavior by university presidents is typically swept under the carpet unless it becomes public.
"It's a myth that people are being fired left and right," she said. "My experience in academe is that the higher up they are, the harder it is to fire them."
Public complaints often lead to public resolutions, and in most harassment cases that have become public, the administrator has resigned. But many are hired elsewhere, and some remain on their university's payroll, either as faculty members or in lesser positions.
"Often people are let go quietly," Sandler said. "People resign and say it is for personal reasons, and you never know why."
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