Texas Instruments CEO Ousted for Code of Conduct Breach
(Bloomberg) -- Texas Instruments Inc. said Chief Executive Officer Brian Crutcher resigned after less than two months in the job, citing violations of the chipmaker’s code of conduct. His predecessor, Rich Templeton, will resume the role on a permanent basis.
“The violations are related to personal behavior that is not consistent with our ethics and core values, but not related to company strategy, operations or financial reporting,” the company said Tuesday in a statement, without elaborating. Shares of Dallas-based Texas Instruments fell 2.3 percent in extended trading.
Crutcher is the third chip company leader in less than two months to leave his job over a breach of rules on personal conduct, following the departures of Intel Corp.’s and Rambus Inc.’s CEOs. Intel’s Brian Krzanich was found to have had an extramarital relationship with another employee. Those resignations, as well as the broader backdrop of the #metoo movement focused on eradicating gender-based discrimination, harassment and abuse, may be triggering heightened scrutiny of the personal behavior of tech-industry executives.
“It’s quite surprising -- TI has always been so by the book and their executives have always been so well-trained,” said Tore Svanberg, an analyst at Stifel Nicolaus & Co. “Boards are definitely under pressure to do what’s right ethically.”
The board acted after receiving a report on Crutcher’s behavior, Templeton said in an internal video address to employees. A company spokesman declined to comment on the nature of the violation and whether it was related to a personal relationship.
By acting to remove him, directors were forced to go back on their earlier ringing endorsement.
“The directors have had a number of years to assess Brian’s ability, results and style, and we are highly confident he is TI’s next great leader,” Wayne Sanders, lead director of the board and chairman of the governance and stockholder relations committee, said in a January statement when Crutcher was named as the next CEO.
Templeton, 59, returns to the helm of a company he led for more than 13 years, during which he transformed Texas Instruments into the leading provider of analog chips and made it one of the most profitable companies in the industry. Crutcher’s promotion to president and CEO to replace Templeton was announced six months ago, he just took the reins on June 1. Both executives have spent more than 20 years at Texas Instruments. Crutcher also resigned from the board.
“My wife asked me if I was surprised, disappointed, mad or excited about returning as CEO,” Templeton said in the video. “The simple answer is ‘yes’ to all of those thoughts and emotions.”
He will most likely stay in the post until the company has identified his successor from within its ranks and trained that person, a path it typically follows, according to Stifel’s Svanberg.
For Crutcher, as for his counterpart at Intel, an involuntary exit is going to be expensive. He could be forced to surrender as much as $43.3 million in stock awards, according to data compiled by Bloomberg.
Texas Instruments, which is scheduled to give its full earnings report next week, said second-quarter revenue rose to $4.02 billion, up 9 percent from a year earlier. Profit was $1.40 a share, including a 3-cent per-share tax benefit. On average, analysts had predicted profit of $1.30 a share on sales of $3.97 billion.
At least 437 high-profile executives and employees had been accused of harassment or other misconduct as the #metoo movement has increased scrutiny of all executive behavior over the last 18 months, according to a tally updated daily by crisis-consulting firm Temin & Co. Of those, 259 were fired or left their jobs, the study found.
“Pandora’s box has been opened and there’s no putting the lid back on,” said Davia Temin, founder and CEO of Temin & Co. “There’s been a lot of bad behavior, for a long time, and in the past it’s often been walled off or dealt with privately. But now scrutiny has been unleashed.”
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