UGBA 107 Journal 7 3032724177
In the wake of recent C-suite scandals, many companies are pondering how the board of directors should
respond to questionable actions by a CEO that are not considered ‘illegal’. Whether or not board members should
take action against the CEO for such actions is an ongoing debate with multiple perspectives in play.
As discussed in lecture, the board of directors oversees a business corporation on behalf of shareholders.
The board has an obligation to investigate the CEO in the event of credible allegations against him or her, and has
the authority to dismiss the CEO, reduce pay, or forced unpaid suspensions. However, the gray area arises when
discussing what the board of directors should do in the event of non-illegal activity. Such actions include making
controversial public remarks, acting verbally abusive, or pursuing inappropriate relations with an employee.
As aforementioned, there are multiple perspectives that can come into play in regards to whether or not it is
appropriate to take action against the CEO. Before arriving at a decision, it is important to outline that the
stakeholders involved in this situation include the broader organization, employees, management, and shareholders
of the company. According to the utilitarian framework, the ethical nature of an action is judged by its outcome, and
how much happiness it brings to the majority. Thus, applying the utilitarian framework in this scenario, if scope of
the CEO’s actions were indicative of widespread cultural problems that adversely impacted the company and its
shareholders, then the CEO’s actions would be considered unethical, and action would need to be taken to
reprimand the CEO in order to mitigate the situation, and therefore benefit the majority.
ethical framework used to analyze the CEO’s actions and the magnitude of impact on stakeholders.
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1 https://www.gsb.stanford.edu/sites/gsb/files/publication-pdf/cgri-survyey-2017-fair-punishment-ceos.pdf