In This Article:
The CEO of major US homebuilder KB Home (KBH), Jeffrey Mezger, whipped up a mountain of negative press this week after he was caught on tape using homophobic and sexist slurs.
That tape probably garnered even more headlines than it usually would because Mezger was railing against his neighbor, and apparent nemesis, the comedian Kathy Griffin. In light of all of this negative press, one might assume that Mezger’s offensive rant jeopardized his job.
However, it’s not entirely clear that Mezger’s outburst was a career-ender. To be sure, Mezger didn’t simply lose his temper. He called Griffin a “bald d-ke” and a “c-nt” after she and her boyfriend called the police to report a noise disturbance coming from his Bel Air home. Griffin had reportedly shaved her head out of solidarity with her sister who died of cancer last week, making Mezger’s comments seem even more callous.
Still, as ugly as the Griffin dispute was, it may not end up hurting the company, and that’s the main question that will concern the board.
‘Does a controversy involving him affect the company itself?’
“The question is, does a controversy involving him affect the company itself?” said Charles Elson, the director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “They’ll look at, ‘Has the market reacted negatively to it? … It may not impact it at all.”
KB Home may be particularly suited to weather a public-relations storm like this one, as it’s not a very well-known consumer-facing brand and hasn’t been embroiled in other high-profile controversies. In the day after the Kathy Griffin story broke, the stock fell by a modest 2%.
It’s unlikely the board would fire Mezger over this, according to Bruce Kogut, director of the Sanford C. Bernstein & Co. Center for Leadership and Ethics at Columbia University’s Business School.
“I doubt if the board would take action on this event, unless it’s part of a longer negative narrative or a stressful time for the CEO,” Kogut told Yahoo Finance in an email. “A good board however will surely engage the CEO on the behavior and will suggest actions, such as a coach or counselor, to help the CEO to stay on course.”
Mezger’s track record at KB Home will help determine his survival there, Kogut said. He noted that “a lot of CEOs have acted beastly at times,” though he acknowledged that the pressure in this case could be amplified amid an atmosphere of lower tolerance for this kind of behavior.
A long history of loud-mouthed CEOs
Indeed, Mezger is far from the first business leader whose temper has erupted in a loud and public fashion. Former Enron CEO Jeffrey Skilling infamously called a fund manager an “a–hole” on a recorded conference call back in 2001. Five years later, business-media darling Mark Cuban got fined $250,000 for outbursts after Game 5 of the NBA finals.