As Johnson Controls CEO Alex Molinaroli has learned, you pay the price when you kiss and don't tell.
The Milwaukee-based company's compensation committee chose to dock Molinaroli's annual bonus by 20 percent, according to a proxy statement released Monday. The move was punishment for the CEO's extramarital affair with the principal of a consulting firm Johnson Controls did business with, which an internal review found to violate the company's ethics policy. Altogether, Molinaroli, who has admitted to the affair, is losing out on around $1 million.
The company's executive committee retained outside counsel to guide it through its review of Molinaroli's indiscretion. The 55-year-old CEO had an affair with Kristin Ihle, whose company Lichter & Ihle advises businesses on talent management and organizational planning. Johnson Controls had been a client for "approximately 30 years" before it severed relations with the consulting firm were terminated after the affair came to light, according to the proxy.
Molinaroli's wife Patsy filed for divorce in June, following the affair.
Through the review, the company's executive committee and board determined that Molinaroli had broken the company's ethics policy by not alerting the audit committee of the affair in a timely manner, which they found could be seen as a conflict of interest. The review also found that Ihle's firm did not have input in the board's decision to tap Molinaroli as CEO in October 2013.
Despite the bonus cut, Molinaroli will still earn more than $19 million this year, nearly double what he made in 2013, largely because of his promotion within the company. Beyond slashing Molinaroli's bonus, Johnson Controls' executive committee said it would take no further action against its CEO.