CEOs ought to operate their companies in such a manner that their integrity and work ethic may not be questioned.
Take the example of Unity (ticker: U) CEO John Riccitiello who is named in this lawsuit. If the allegations are true, it speaks to horrible behavior on Mr. Riccitiello’s part. Setting the allegations aside for a moment, what Board of Directors approves of a situation where the CEO is romantically involved with the Head of Human Resources? Who gives a damn if the relationship was disclosed? This case should have raised serious questions among the institutional investor community as it relates to the judgement of Unity’s CEO, Unity’s Board of Directors and Unity’s culture. If the CEO of a publicly-traded company isn’t 100% focused on corporate operations, I can promise you there is a more qualified person somewhere on God’s green earth who is better suited for the job. This speaks to “CEO Opportunity Cost“, namely, having the wrong person in the CEO chair.