Coverage: KB Home cuts CEO’s bonus after Kathy Griffin rant

KB Home chief executive Jeffrey Mezger will see his annual bonus reduced by 25 percent after unleashing a tirade-laden rant at comedian Kathy Griffin, his Los Angeles neighbor.

Aimee Picchi of Moneywatch had the news:

The executive’s slurs became public after HuffPost released a recording of Mezger calling Griffin a “f*****g bald dyke,” a “b****” and a “f*****g c***.”

KB Home, which is known for building high-end homes that can cost upwards of $2 million each, said in a regulatory filing Mezger’s behavior was “unacceptable and a negative reflection” on the company. It warned that Mezger would be fired if there was another similar incident.

Although CEOs aren’t necessarily known for their warm and cuddly image, the public tends to be unforgiving of misbehavior from corporate leaders. Other CEOs that have recently come under fire include Uber’s Travis Kalanick, who was forced to resign from the ride-hailing company in July in part because of the company’s sexist culture. Consumers often agree that it’s appropriate for a company to fire a CEO if their actions are morally questionable, even if it wasn’t against the law, according to a 2016 study from Stanford University.

For KB Home, the risk is that Mezger’s verbal attack could hurt its brand, tying the clips of his vulgar language to the company’s upscale, polished image. While the company said the executive “has always conducted himself in a professional manner” while at KB Home, that’s not what many consumers might remember.

Michael Hiltzik of the Los Angeles Times wrote that Mezger is getting away with just a slap on the wrist:

This may sound like a classic L.A. story, pegged to what really goes on in affluent neighborhoods filled with residents who present a media-friendly image to the public but are subject in private to the same fury-inducing indignities from neighbors as, well, the rest of us. It’s evident, moreover, that Mezger forgot a fundamental rule about life in the fast lane in modern times, which is there’s almost always a camera running, and that the lives of celebrities and business leaders are almost never really private.

More to the point, social media can distribute and magnify almost any behavior. The disclosure of Mezger’s rant produced a swift response on Twitter from personal finance guru Suze Orman, who tweeted: “Disgraceful talk from the CEO of KB HOMES. You really want to buy a home from this man?” Mezger has served as the homebuilder’s CEO and president since 2006 and was named chairman in 2016.

The homebuilding company’s prompt reaction to its CEO’s public misbehavior suggests that the ground has been shifting beneath the feet of top executives who stray over the line. In years past, a board might take months to ponder discipline for a CEO who was caught using abusive language (typically against subordinates), engaging in sexual harassment or even consensual adultery, or doing something otherwise immoral.

Anders Melin of Bloomberg News reported that Mezger would be dismissed for another offense:

It’s rare for boards to publicly levy monetary penalties on executives for transgressions that aren’t in some way related to their jobs.

Mezger hired Sitrick & Co., a Los Angeles-based public-relations firm that specializes in crisis communications.