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CEOs and public firings: A double standard?

Saturday, 17 Aug 2013 | 6:00 AM ET
  • General scolding for a public firing at AOL.
  • But CEOs get publicly fired all the time.
  • Double standard? It's the paycheck.
  • What's the first public firing in media biz?

Quite the little spectacle over at AOL this week, no? The CEO, Tim Armstrong, dismissed one of his directors in the middle of a conference with about 1,000 employees. It was pretty abrupt and prompted a bunch of headlines suggesting that, well, it was kind of a jerky thing to do.

"The CEO showed lack of control and let his feelings overwhelm his better judgment," said Raj Echambadi, a professor at the University of Illinois College of Business. "People expect CEOs to demonstrate control at all times, especially while leading poorly performing companies."

Indeed, human resource experts generally put a premium on preserving an employee's dignity, even if you're giving him or her the ax.

The stoning scene from Monty Python's "Life of Brian."
Source: Warner Bros.
The stoning scene from Monty Python's "Life of Brian."

Armstrong later apologized for the episode, although the employee stayed fired. (The first public media firing? See end.)

There's a little reverse irony here, though. When a CEO is dismissed, no one gets upset about the public and sometimes heartless nature of it. Some recent examples:

J.C. Penney unceremoniously ousted CEO Ron Johnson in April after a little more than a year on the job.

Yahoo dismissed Carol Bartz (by phone call, no less).

Electronic Arts went more of the standard route: press release and CEO mea culpa.

Groupon also went with a CEO mea culpa, but the CEO was pretty funny about it.

Lululemon insisted that the departure of its CEO had nothing to do with its see-through pants controversy—which, of course, made lots of people think it was about the see-through pants controversy.

Hewlett-Packard: Three CEOs in six years, with big headlines and a soap opera every time.

Sorry ... but you're still fired
AOL CEO Tim Armstrong has apologized after publicly firing an employee. Edward Freeman, a professor at the University of Virginia Darden School of Business, weighs in.

Of course, when you're the top dog, you get more attention, wanted or not. Getting rid of the CEO is going to affect the stock price one way or another, so it is going to be public. Very public.

"CEOs are always in the news. So how they're handled has a lot to do with the public's perception of not only that board but of the whole company," said Richard Moran, CEO of consultant Accretive Solutions, in a discussion on ethics at Santa Clara University. "A lot of times the process of letting a CEO go is not handled very well."

As for the dignity element, there's undoubtedly a little schadenfreude on the part of most people.

"My guess is that there is no mercy for someone who earns $10 to $20 million," said Baruch Lev, a professor at New York University Stern School of Business. "The risk, people think, is commensurate with the compensation and perks."

And, of course, the outgoing CEO usually gets a final multimillion-dollar peck on the cheek as he or she walks out the door.

That probably eases the blow to dignity. Probably.

—Allen Wastler is managing editor of CNBC Digital. He can be followed at AWastler@twitter.com.

Bonus for making it to the end of the article, something most people don't do...

What was the first Big Media public firing? We'd argue it was Art Godfrey's dismissal of Julius LaRosa.

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