NEW YORK – Boeing Co. (BA) on Monday said its board forced out president and chief executive officer Harry Stonecipher (search) after the married 68-year-old had an affair with a female executive at the company, saying his leadership abilities had been damaged.
The unexpected ouster makes Stonecipher, who spent just 15 months in the top job, the second consecutive CEO to depart the Chicago-based airplane maker and defense contractor in disgrace.
His predecessor, Phil Condit (search), resigned Dec. 1, 2003, as a result of the defense contracting scandals that ultimately sent two Boeing executives — ex-Air Force procurement official Darleen Druyun (search) and chief financial officer Mike Sears (search) — to jail.
Chief financial officer James A. Bell (search), 56, was named president and CEO on an interim basis. Bell, a 32-year Boeing veteran, is not a candidate to permanently replace Stonecipher as CEO, the company said. He is the first African-American to ever hold the top job at Boeing.
Boeing said an internal investigation prompted by information sent anonymously to chairman Lew Platt and the company's legal and ethics leaders 10 days ago revealed a "consensual" relationship between Stonecipher and the female executive that the board determined was in violation of the company's code of conduct.
"As we explored the circumstances we felt there were some issues of poor judgment that would impair his ability to lead," Platt said on a conference call.
He said the female employee's career and compensation had not been affected by the relationship, which began this year.
"It's not the fact that he was having an affair," Platt said.
The relationship with the female employee, who did not report directly to Stonecipher, was consensual, Boeing said. Stonecipher, 68, is married and has two children and two grandchildren.
"Harry ... was really the staunchest supporter of the code of conduct," Platt said. "He drew a very bright line for all employees."
Platt said the requested resignation "was in no way related to the company's operational performance or financial condition, both of which remain strong."
Spokesman John Dern said the female executive, who was not identified, did not report to Stonecipher and remains with the company. He declined to provide further details.
"This raises a lot more questions than it answers," said analyst Richard Aboulafia of the Fairfax, Va.-based Teal Group.
"Boeing definitely has had issues with violations of conduct and, as a result, are having to take a very hard line," said Rick Meckler, president of investment firm Libertyview Capital Management.
"Let's face it, the environment for companies has changed," he added. "Boards are taking a more active role in dealing with problems at their companies."
Stonecipher, who had been president and CEO of McDonnell Douglas Corp. until its merger with Boeing in 1997 and was Boeing's president and COO from 1997 to 2001, will also leave the company's board.
The plain-spoken Stonecipher had said in a recent analyst conference call that he was willing to stay at the company at least until its 2006 annual meeting.
"I'm going to be around for awhile, but if they find somebody they like to run this job better, then I'm ready to leave tomorrow if they want me to," he said last month.
Reuters and the Associated Press contributed to this report.