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10 CEOs Who Presided Over Disaster

Elizabeth Holmes, former boss of Theranos

Being the boss of a billion-dollar company is a tough job, which is why CEOs tend to command extraordinary salaries.

As the boss, you take the credit for when things go well, no doubt with a hefty bonus alongside your gigantic pay.

On the flip side, when things go wrong, you take the blame.

This can include being fired, public shame, and even going to prison.

Here are 10 CEOs who presided over disaster.

Dick Fuld - Lehman Brothers

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Dick Fuld was boss of the Lehman Brothers in 2008.

He had worked for the bank for 40 years and risen up through the ranks to become CEO, a role he took on in 1994.

In 2008, his aggressive pursuit of grown, particularly in the subprime mortgage market, massively exposed the firm to risky assets .

The company heavily invested in real estate and mortgage, without sufficient hedging against potential downturns.

The housing market subsequently crashed, leading to disaster.

Fuld was criticized for his reluctance to address the severity of the crisis

As the crisis got worse, his failure to listen to other opinions, and insistence of doubling down on failed strategies, led to a culture of excessive risk-taking.

Fuld failed to secure either capital injections or a buyer for the firm.

This reflected a lack of willingness in the market to support Lehman which subsequently went bankrupt, kickstarting a global financial collapse.

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Elizabeth Holmes - Theranos

Holmes was the founder and CEO of healthtech company Theranos, which promised to revolutionize blood testing technology.

However, the product did not live up to the promises, which led to huge financial and reputational damage.

Holmes was accused of knowingly misleading investors, partners, and patients about the capabilities of Theranos's technology.

Her downfall began with investigative journalism and regulatory scrutiny.

The probes exposed the company for using commercially available machines for testing instead of its own technology.

It was found it had manipulated research and test results.

In 2018, Holmes and the former president of Theranos, Ramesh "Sunny" Balwani, were indicted on multiple counts of wire fraud and conspiracy to commit wire fraud, facing severe legal consequences.

Holmes was jailed for more than 11 years in federal prison for defrauding investors in Theranos, Inc. of hundreds of millions of dollars.

Martin Winterkorn - Volkswagen

Under Winterkorn's leadership, Volkswagen was involved in a massive emissions cheating scandal in 2015, where the company admitted to installing software in diesel engines to cheat on emissions tests.

VW was found to have installed "defeat devices" in diesel vehicles to cheat on emissions tests, showing compliance with environmental standards while the cars emitted pollutants at up to 40 times the legal limit in real-world driving.

This not only violated environmental laws but also betrayed consumer trust and led to significant financial and reputational damage for the company.

Winterkorn resigned shortly after the scandal became public, asserting he was unaware of the wrongdoing but accepting responsibility as the CEO.

Ken Lay -Enron

Lay was CEO of Enron when it filed for bankruptcy in 2001, following an accounting scandal that hid billions in debt from failed deals and projects.

The company used Special Purpose Entities (SPEs) to hide billions of dollars in debt from failed projects and investments.

This both artificially enhanced the company's stock price but also misled its investors and regulators

There was evidence Lay had known about the practice.

In 2006, Ken Lay was found guilty of multiple counts of fraud and conspiracy connected to Enron's collapse.

However, before he could be sentenced, Lay died of a heart attack in July 2006.

Consequently, his convictions were vacated due to his death, a principle that holds in American jurisprudence where defendants die before they have the opportunity to appeal their convictions.

This meant Lay never served prison time, but his actions and the downfall of Enron remain emblematic of corporate greed and ethical misconduct.

Carly Fiorina - Hewlett-Packard (HP)

Fiorina's tenure at HP was marked by the controversial acquisition of Compaq, which led to a significant drop in stock value and a loss of investor confidence.

This move was intended to strengthen HP's position in the personal computer market but was met with significant internal and external opposition.

Fiorina was also criticized for her leadership style and the layoffs that followed the merger.

Her departure in 2005 was attributed to disagreements with the board over the company's performance and strategic direction.

John Stumpf - Wells Fargo

Stumpf led Wells Fargo during a scandal where employees created millions of fraudulent accounts to meet sales targets, leading to his resignation and significant fines for the bank.

The practice emerged publicly in 2016.

It was driven by an aggressive sales culture that pushed employees to meet unrealistic sales targets, leading to widespread unethical behavior across the organization.

Stumpf faced intense criticism for his role in fostering a corporate culture that prioritized sales and profits over ethical practices and customer welfare.

Under his leadership, Wells Fargo employees engaged in practices known as "cross-selling," which aimed to increase the number of accounts held by each customer.

However, this spiraled out of control.

It resulted in the creation of fake accounts to meet sales quotas, ultimately harming customers' credit scores and leading to unauthorized fees.

Stumpf resigned from his position as CEO and Chairman in October 2016 amid the fallout from the scandal.

He was also barred from the banking industry by the Office of the Comptroller of the Currency (OCC) and agreed to pay a $17.5 million fine to settle regulatory charges related to his role in the sales practices scandal.

Edward Lampert - Sears Holdings

Lampert's strategy of cutting costs and selling assets as CEO of Sears Holdings was criticized for accelerating the decline of the retail giant, leading to its bankruptcy in 2018.

He attempted to revitalize Sears through a combination of cost-cutting, asset sales, and a focus on online retailing.

However, these strategies failed to address the retailer's fundamental issues like outdated stores and its failure to compete effectively with rising e-commerce giants.

Many experts argue that Lampert's financial engineering and neglect of the core retail business contributed significantly to Sears' downfall, marking a contentious tenure that ended with one of the most iconic retail failures in U.S. history.

Travis Kalanick - Uber

Kalanick's tenure as CEO of Uber was marred by numerous scandals, including allegations of a toxic work culture, sexual harassment, and regulatory evasion tactics.

His aggressive expansion strategy propelled Uber into a global ride-sharing giant.

However, Kalanick's tenure was marred by a series of scandals involving allegations of corporate misbehavior, including reports of a toxic workplace culture, sexual harassment, privacy violations, and regulatory evasion.

These issues culminated in a public outcry and investor pressure.

This led to Kalanick's resignation in 2017.

Brian Dunn - Best Buy

Dunn resigned amid personal misconduct allegations and underperformance of the company, which struggled to adapt to the competitive retail landscape and the rise of online shopping.

He resigned in 2012 amid personal misconduct allegations.

His tenure was marked by challenges, including declining sales and stiff competition from online retailers.

He faced criticism for failing to adequately address the evolving retail landscape, which increasingly favored online shopping over brick-and-mortar stores.

He was also hit with personal misconduct allegations, involving an inappropriate relationship with a female employee, hastened his departure.

Ron Johnson - J.C. Penney

Johnson attempted a radical transformation of J.C. Penney's retail strategy without testing, leading to a dramatic fall in sales and the company's financial decline.

Hired in 2011 after his success with Apple's retail stores, Johnson implemented radical changes, including eliminating popular coupons and sales, introducing boutique-style shops within stores, and attempting to shift the brand's image.

However, these initiatives alienated J.C. Penney's core customer base without attracting enough new shoppers, leading to a significant decline in sales and financial instability.

Johnson's tenure, which ended in 2013, serves as a cautionary tale of the risks associated with drastic, top-down changes that fail to consider the needs and expectations of existing customers.

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