Consequences of being an unethical leader TEAM 3: L E A D I N G S Consequences of being an unethical leader Heather Smith, Karen Nostrant & Careea Nordè

Introduction Over the last fifteen years, a multitude of corporate scandals have come to surface, they have challenged our stock markets and made America take another look into ethical behavior. Remember Enron? New legislation; yet still scandals

Dennis Kozlowski: former CEO of Tyco International LTD Once known as the “management guru who cracked the secret of running a successful, lean conglomerate” (Maremont & Lauri P., 2002, pp.7-8). Kozlowski spent over 135 million of Tyco funds to benefit his own personal lifestyle; which was above and beyond his compensation for being the CEO of Tyco (Maremont & Lauri P., 2002). Was indicted for tax evasion in 2002 and convicted in 2005 for grand larceny, conspiracy and fraud (De La Merced, 2012). He never paid Tyco back the borrowed money and forgiven debts. Kozlowski’s level of greed, led to his incarceration by a Federal judge. He was sentenced to pay 70 million in restitution for his unethical behavior (Dubrin, 2010). In 2012 Kozlowski was granted work realease. Kozlowski has obtained a job in New Canaan, Connecticut for a company called: Assets Technology Group (Byrne, 2012). Here he will be teaching former inmates through job training

Steven P. Jobs: CEO of Apple Corp. and Pixar In 2006, there was a series of investigations performed by the SEC in regards to the backdating of stock options. “Backdating is an illegal accounting process consisting of picking a date in the past; when a stock's value was lower, to assign the exercise price of options” (Moisecot, 2006). As a result of their findings, they discovered that Steve Jobs was directly in two procedures involving backdating. Despite the validity of these results, it was further discovered that CEO Jobs did not profit from the deal. Since Jobs did not profit from these ordeals, no charges were ever brought against him. Although there were no legal charges filed against him after this investigation, it did taint his image. Although he never suffered from any legal technicalities, his reputation was tarnished until his death on October 5, 2011.

Patrician Dunn: non-executive chairman of Hewlett-Packard During that time that HP’s secret board meetings were being leaked to the press. In an effort to identify the source, Dunn authorized an investigation using outside investors to find the person who was leaking sensitive information. The investigation turned into a spy scandal when pretexting was identified as the method used. According to correspondent Lesley Stahl, pretexting is “where phone records are retrieved by subterfuge and pretense – where someone calls the phone company and pretends to be someone else in order to obtain records” (Schorn, 2009, p. 1). On October 4, 2006, California Attorney General Bill Lockyer indicted Patricia Dunn along with four others, on felony wire fraud and conspiracy charges (Woellert, 2006). On September 22, 2006, Dunn was forced by the board of directors to resign her position. After this incident at Hewlett Packard her reputation was tarnished, so she then turned to philanthropic work until her death (2012). Dunn died on December 4, 2011 at her home, at the age of 58. Patricia Dunn graduated from Berkley in 1975 with a degree in journalism. She was a charismatic businesswoman who went from a sectary to become CEO of Barclay’s Global Investors. In 1998, Dunn joined Hewlett-Packard’s (HP) board and was named the chairman in 2005, after Carly Fiorina was fired from this position (Nogushi, & Nakashima, 2006).

Martha Stewart: chairwoman and CEO of Martha Stewart Living Omnimedia Martha Stewart went to college in New York at Barnard College; she earned a degree in European and architectural history in 1962. Martha Stewart is a business magnate, media personality and a magazine publisher. Her focus has been on elegant homemaking. In 2002 Martha Stewart made headlines again for insider trading. Then in 2004 she was convicted of lying to investigators about the stock sale and was sentenced to jail, and fined thirty thousand dollars and finished her sentence out on house arrest. Currently Martha Stewart is in another lawsuit with Macy’s over her home collection. It seems that she has signed with JCPenny stores and that is in violation of her Macy’s agreement. However her business still thrives despite her convictions in 2004 for insider trading. Martha Stewart is going to be on PBS TV this fall; she will be hosting the “Martha Stewart Cooking School” (Huff Post Media, 2012).

conclusion Leaders build reputations leading by example, trust, and being ethical that is what sets ethical leadership apart from unethical leadership. When we tarnish our reputation by doing unethical decisions; those decisions will live with us for the rest of our lives, even if we do not go to jail. After reading about all four of these leaders, you can see it did not take much for them to become unethical leaders

references Byrne, J. (2012, March 19). Dennis Kozlowski’s out of jail! Here’s what his new life is like. Business Insider. Retrieved from http://articles.businessinsider.com/2012-03- 19/wall_street/31209157_1_work-release-prison-bus-mid-state-correctional-facility De La Merced, M. (2012, March 16). Dennis Kozlowski’s homecoming, of sorts. The New York Times. Retrieved from http://dealbook.nytimes.com/2012/03/16/dennis-kozlowskis-homecoming- of-sorts/ Dubrin, A. (2010). Leadership: Research findings, practice, and skills. 6th Edition. (p. 184). Rochester Institute of Technology. South-Western Cengage Learning. Huff Post Media. (2012, April 19). Retrieved from http://www.huffingtonpost.com/2012/04/19/martha-stewart-pbs-hallmark_n_1438214.html Maremont, M., and Laurie P. (2002, Aug 07). Executive privilege: How Tyco’s CEO enriched himself. Wall Street Journal, pp.1-A-1, pp.1-16. Retrieved September 25, 2012 from: http://search.proguest.com/docview/398787060?accountid=28644 Moisecot, R. (2006, February 24). Long Bio: all about Steve Jobs.com. Retrieved September 27, 2012, from All about Steve Jobs.com: http://allaboutstevejobs.com/bio/longbio/longbio_11.php Noguchi, Y., & Nakashima, E. (2006, September 13). Chairman, Director resign in HP scandal. The Washington Post, pp. 1-3. Retrieved from http://www.washingtonpost.com/wp- dyn/content/article/2006/09/12/AR2006091200610.html Schorn, D. (2009, February 11). Patricia Dunn: I am innocent. CBS News, pp. 1-6. Retreived from http://www.cbsnews.com/8301-18560_162-2069430.html Woellert, L. (2006, October 5). Former chair Dunn indicted. BloombergBusinessweek Technology. Retrieved from http://www.businessweek.com/stories/2006-10-05/former-hp-chair-dunn- indictedbusinessweek-business-news-stock-market-and-financial-advice

The end! thanks for Tuning in!!! Heather, Karen & Careea