10 Notable CEO’s Dismissed by Their Boards
Have you ever wondered why some people who started companies end up leaving them? In the dynamic world of business, co-founders and CEO’s play a crucial role in shaping the identity of a company. However, there are times when these founders and CEO’s find themselves facing unexpected changes, and the decision often comes from the company's board of directors. Take, for example, the recent situation with Sam Altman, who was the CEO of OpenAI since 2019. The board of directors concluded that his lack of transparency with them had caused them to lose trust in his ability to effectively lead OpenAI, and as a result, they decided to terminate his role.
But Sam Altman isn't the only CEO who has been fired from the company. In this article, we're going to look closely at a list of co-founders who were asked to leave by their company's board of directors. Come along with us as we explore the stories of these co-founders and CEOs who had changes in their roles. We'll find out why the board of directors made such big decisions. These stories give us a peek into the complicated workings of companies and help us understand why boards make such important choices
1. Steve Jobs, Apple
Steve Jobs was ousted from his position as CEO of Apple in 1985 due to a power struggle between the company's leadership and a difference in vision. Jobs, known for being really passionate and having big ideas, didn't agree with the board of directors and the CEO, John Sculley, especially about the Macintosh and where Apple should go. The board was worried about how Jobs managed things and how well the Macintosh was doing financially, so they decided to remove him as CEO of the company. This decision was also because Apple was having financial problems and needed a leader who could handle the complicated business situation. This decision ultimately led to Apple's decline until Jobs returned to the company in 1997 and began to rebuild the company.
2. Jack Dorsey, Twitter
Dov Charney, the founder and former CEO of American Apparel, was removed from his position by the board of directors primarily due to allegations of misconduct and a series of controversies surrounding his leadership. These allegations included inappropriate use of corporate money, allegations of sexual harassment, and creating a hostile work environment. The board determined that these allegations constituted a violation of the company’s code of conduct, and therefore determined that removing Charney was in the best interest of the company. After his departure, American Apparel underwent changes in leadership and ownership as part of its efforts to rebuild its reputation and move forward from the controversies associated with Charney.
3. Martin Eberhard, Tesla Motors
Martin Eberhard was ousted from his position as CEO of Tesla Motors by the board of directors due to delays in the Tesla Roadster's production and other operational issues. As the CEO, he was responsible for leading the company, ensuring the production of vehicles ran smoothly, and meeting customer expectations. Unfortunately, the production of the Tesla Roadster was delayed, and other operational issues such as financial mismanagement and a lack of focus on marketing became apparent, leading to his removal from the role. Elon Musk subsequently took over as CEO in 2008, leading Tesla through a critical period and successfully securing the financing necessary for the company's survival.
4. Travis Kalanick, Uber
Travis Kalanick was removed as Uber's CEO by the board of directors due to a combination of factors that highlighted a toxic workplace culture, including allegations of sexual harassment and discrimination. These issues, coupled with legal battles, regulatory challenges, and concerns about the company's financial performance, created a bad environment. The board felt that Kalanick's leadership was no longer able to take the company in the right direction. Ultimately, in June 2017, Kalanick resigned under pressure from the board, paving the way for the appointment of Dara Khosrowshahi as the new CEO.
5. Jerry Yang, Yahoo Inc.
Jerry Yang, co-founder of Yahoo Inc., was removed from his post in 2012 by the board of directors primarily due to a series of strategic missteps and declining financial performance during his tenure. One of the key factors was Yang's controversial rejection of Microsoft's acquisition offer in 2008, which was seen as a missed opportunity by some shareholders. After this decision, Yahoo struggled to keep pace with industry rivals, particularly Google, facing internal conflicts and a lack of clear strategic direction. Shareholder dissatisfaction grew as the company's market position weakened. In an effort to address these challenges, the board decided on a leadership change, leading to Yang's resignation from all positions within Yahoo, marking the end of an era for the co-founder in 2012.
6. Dov Charney, American Apparel
Dov Charney, the founder and former CEO of American Apparel, was removed from his post by the company's board of directors in 2014 due to allegations of misconduct. These allegations included sexual harassment, use of improper language in the workplace, and misuse of corporate funds. The board also found that Charney had exhibited poor judgment in his management of the company, resulting in a number of lawsuits. Ultimately, the board concluded that it was necessary to remove Charney from his position in order to protect the company from further harm and ensure its long-term success.
7. Chip Wilson, Lululemon Athletica Inc.
Chip Wilson, the founder of Lululemon Athletica Inc., faced his removal from the board of directors in 2015 due to a combination of controversial remarks about the company's product quality and fit, and disagreements with the company's leadership. He made remarks that were viewed as insensitive and misogynistic, which caused a public backlash and damage to the company's reputation. Additionally, Wilson clashed with the board over strategic decisions, including his dissatisfaction with the direction the company was taking. In light of the negative publicity and the need for a more cohesive and forward-looking leadership, the board decided to sever ties with Wilson, marking a significant change in the leadership structure of Lululemon Athletica Inc.
8. John Schnatter, Papa John
John Schnatter, the founder of Papa John's Pizza, was removed from his post as chairman of the board of directors in July 2018 after it was revealed that he had used a racial slur during a conference call, which garnered widespread criticism and backlash. This incident was seen as unacceptable, and the board of directors determined that it was in the best interest of the company to remove Schnatter from his position in order to avoid any further damage to the company's reputation.
9. Philippe Dauman, Viacom Inc.
Philippe Dauman faced his removal from the position of CEO of Viacom Inc. in 2016 following a series of conflicts and legal battles with Sumner Redstone, the company's controlling shareholder. Dauman's leadership had been under scrutiny due to Viacom's declining financial performance and share value. Additionally, there were concerns about corporate governance and the handling of Viacom's media properties. Ultimately, the board determined that Dauman's leadership had become too damaging to the company and that new leadership was needed to restore confidence in the company and to help it move forward in a positive direction.
10. Kevin Tsujihara, Warner Bros.
Warner Bros. board of directors removed Kevin Tsujihara from his post after an investigation revealed that he had used his position to make promises of roles in films and television to a woman with whom he had a personal relationship. This was seen as a misuse of his power and authority as a senior executive, and it was determined that Tsujihara had violated the company's code of conduct, warranting his removal from his post.
In summary, the stories of these ten notable CEOs who were dismissed by their boards show that corporate leadership is complicated and has many aspects. These departures were due to a variety of reasons, including ethical issues, disagreements about strategies, and financial difficulties. These examples demonstrate how important it is for boards of directors to uphold corporate values and ethical standards, and to guide companies through changing conditions. While some of these leaders faced difficulties, some companies later recovered with different leadership. These cases teach us the importance of being open, having ethical rules, and having a shared vision between CEOs and their boards in order to be successful in business.