CEOs Behaving Badly

Federal regulators are investigating online postings by the Whole Foods chief executive officer, Mr. John Mackey or shall we say "Rahodeb." (The company's board of directors has started its own inquiry. If you have not been buried under a rock for the past decade, you should have a fair sense of what these handpicked puppets and cronies are likely to "find". Remember Steve Jobs and the infamous options scandal?)

Do not get me wrong, we all make mistakes. However, it is the audacity of the mistake and the motivation of the perpetrator that can make all the difference in the judgment that we pass. Mr. Mackey was online trashing a company - Wild Oats - that he wanted to buy (The acquisition deal is on hold - pending a Presidential pardon of Mr. Mackey, I would assume.) I am inclined to believe that this was no mistake or "bad judgment" as Mr. Mackey calls it.

These days "bad judgment" is a euphemism for "darn, I got caught doing something I knew was wrong and scummy but I did anyways because I thought I will not get caught." Mr. Mackey was online from 1999 to 2006. How long do you suppose this gentleman took to realize his "bad judgment?"

However, the issue is larger than Mr. Mackey, or online postings or manipulation of media or just bad judgment. What is unmistakable is the audacity or chutzpah of the behavior. Is there something in our system that says to these people that they are above the law? How many people inside the company knew of Mr. Mackey's behavior and kept quiet, for whatever reason? How will the Board deal with Mr. Mackey who has admitted to the act?

Unfortunately, corporate governance is not about laws but their enforcement. It is as much about about corporate culture as it is about societal culture. How many of you are going to remember this case 6 days from now? What are the investors going to do about it?

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