Was Starwood's CEO Caught By Email, Too?

After Harry Stonecipher, the Boeing CEO in 2005, departed due to emails that revealed a relationship with a female Boeing executive, one would think that all CEO;s would have been put on notice.  Don't write down inappropriate activity.  It is possible -- although not a sure thing -- that it happened again.

Last month, the resignation of Starwood Hotel's CEO, Steven Heyer, was widely reported in the business media.  The Associated Press reported from a news release, "differences in opinion regarding Mr. Heyer's management style led the board 'to lose confidence in his leadership.'” Forbes said, Heyer's "aggressive approach and his larger-than-life persona (were) ... rumored to turn board members against him."

However, the Wall Street Journal, intrigued by Heyer's decision to resign without most of his $35 million severance package, investigated further.  Their conclusion is that he was caught by email.

The abrupt departure of Steven J. Heyer from Starwood Hotels & Resorts Worldwide Inc. followed a confrontation with the company's board ignited by an anonymous letter accusing him of personal misconduct, according to people familiar with the situation.  ...

After investigating claims made in the anonymous letter, sent to directors about two months ago, the board pressed Mr. Heyer to explain the large number of emails and text messages to and from female employees on a variety of topics outside normal working hours. They also questioned him about his hiring and promotion practices. ...

The letter received by board members in mid-February contained about 10 specific instances that allegedly showed Mr. Heyer had created a hostile work environment since arriving at Starwood in October 2004, according to a person familiar the details of the situation. It alleged, for example, that on at least one occasion Mr. Heyer made inappropriate physical contact with a female employee outside a restaurant bathroom, this person said. Mr. Heyer denied to the board and in an interview Friday that this incident ever occurred.

Starwood's board hired an outside law firm, Davis Polk & Wardwell, to investigate the letter's allegations, people familiar with the matter say. In the course of the ensuing probe, Mr. Heyer's emails and text messages were scrutinized and found to include an "overwhelming body of evidence" that would have given the board reason to fire him for cause, according to the person familiar with the matter. Under his employment contract, directors could have fired him for cause for five different reasons, among them "gross negligence or willful misconduct."

The investigation uncovered emails and text messages between Mr. Heyer, who is married, and a young, unmarried female employee that were sent at times outside normal business hours and were of a suggestive nature. "There were several provocative conversations, and there was no question that the conduct was inappropriate for a CEO," this person said.

Mr. Heyer said allegations of sexual advances made toward younger female employees "are absolutely not true, they never happened." In regard to inappropriate email and text messages, Mr. Heyer said, "To the best of my knowledge I didn't send any, and I don't remember receiving any." He said the board didn't specifically question him about the content of his messages, but rather about the volume of notes he sent and received.