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Markkula Center for Applied Ethics

Silicon Valley Business Ethics Cases

On the Board

When the CEO is a Close Friend

Bob Harris, a recently retired CFO, has served on the Board of a Silicon Valley tech company for several years. He was initially asked to join the Board by the CEO. The two initially met while serving on another Board and now have become close friends. Recently, the Board was confronted with allegations that the CEO had been having a sexual relationship with a mid-level sales manager at the company. Staff had observed that the individual in question had received numerous promotions and bonuses, and many employees expressed resentment over her seemingly preferential treatment.

Bob shares in the widespread concern that the incident is affecting morale and needs to be addressed. At the same time, a public firing would damage the company's image, and in turn the stock price. He considers confronting the CEO directly, but fears that would be putting his friendship before his duty to the company, its employees, and shareholders. The board has scheduled a meeting for later that day to deliberate on the issue.

What should Bob do?