Among the bestselling novels back in 1962 was Sex and the Single Girl, which soon after was made into a movie starring Natalie Wood, Tony Curtis, Henry Fonda, and Lauren Bacall. Well, with an ever expanding list of chief executives caught having extramarital affairs, there could easily be a sequel, which might be called Sex and the Married CEO.

The recent downfall of General David Petraeus and other top corporate and government officials over allegations of marital infidelity serve as a reminder to CEOs and to companies of what can happen when the boss is caught up in an extra-marital affair. Unfortunately, the potential reputational damage and disruption to succession plans are risks that too often are overlooked before the news comes to light, often through a whistleblower or after allegations of unauthorized expenses or even sexual harassment.

That ousted chief executives are married, however, generally is not the primary reason for their downfall. Most circumstances involve a “close personal relationship” with a subordinate who by definition reports through one or more management levels to the CEO. Boards of directors appropriately focus on such matters as whether the executive's actions resulted in favoritism or undue influence, created a hostile work environment, or damaged the company's reputation. And when a chief executive engaging in such misconduct is married, boards have heightened concerns related to the leader's ethics and judgment.

Why would a chief executive risk losing his (or conceivably her) corporate position, reputation in the business community, and many millions of dollars in current and future compensation and benefits, not to mention the pain caused to the executive's family? Each instance is different, though we can guess at some of the reasons why affairs take place—lust, power, thrill of a secret liaison, and the danger and challenge of getting away with it.

While ethical and moral standards have long been a part of civilized society, the way in which misconduct is viewed in the business environment has evolved.

On a more pragmatic note, a knowledgeable lawyer recently noted, “The executive's whole life gets consumed by the company and there's less social interaction outside of the office, so there is more temptation to create a relationship in the work arena.” No doubt there are other reasons, too. Regardless of why a CEO strays, there's little doubt that when the relationship comes to light, the board has to move quickly and decisively to deal with the resulting problems, usually under the harsh spotlight of the media, shareholders and the public. Most companies prohibit company romances for senior executives (extramarital or otherwise) in their codes of conduct. Once the indiscretion is exposed, boards find they have to hold the CEO responsible, or end up sending a message that the code of conduct either isn't important or won't be enforced evenly. The events often disrupt succession plans and create further embarrassment for the company when it is forced to pay a hefty severance to the disgraced CEO.

Let's take a look at reports surrounding a few of the more well-publicized fallen leaders, and the dramatic impact they've had:

·         Christopher Kubasik was Lockheed's Vice Chairman, President, and COO, and slated to become its chief executive, when company officials said the married Kubasik was having a relationship with a female subordinate. The affair, which came to light by a tip from another employee and was confirmed by outside counsel's investigation, was prohibited by the corporate ethics code, driving Kubasik's dismissal last month. Meanwhile, Lockheed lost the leader it had long counted on to run the company well into the future, a major hit to the company's succession plans. The executive who was to replace Kubasik as President and COO is taking the unanticipated step of immediately moving up to the top spot. And the departing CEO now will become executive chairman with a “more active, day-to-day advisory role” assisting the newly identified CEO. Kubasik got a parting gift of $3.5 million for his troubles.

Brian Dunn, who was CEO of Best Buy, was found to have had “an extremely close personal relationship” with a female employee. The board of directors said the relationship “demonstrated extremely poor judgment and lack of professionalism.” The married Dunn, who earned more than $10 million last year, was tossed out as CEO in April, and although he received a severance payment of $4 million he's not permitted to work for a competitor for three years. In addition to losing its CEO, Best Buy also is losing its Chairman, Richard Schultz, who “acted inappropriately” by failing to inform the board or audit committee when the allegations about Dunn first came to light. 

General David Petraeus, head of the U.S. Central Intelligence Agency, was found to have had an extramarital affair with his biographer—coming to light from emails from the biographer to another woman who turned them over to an FBI agent. Concerns included potential breaches of information related to national security. When confronted, Petraeus concluded that at the very least he violated a long-standing code requiring duty and honor, and submitted his resignation in November. In addition to losing his leadership role, his reputation has been badly tarnished, and talk of potential higher office, including the U.S. Presidency, has gone silent. The affair cost the U.S. a highly respected leader who may well have been positioned to make an even greater direct contribution to the country.

Harry Stonecipher, after returning from retirement to retake the reins of Boeing, was ousted as CEO in 2005 because of an improper relationship with a female employee. The affair surfaced by a tip from an anonymous whistleblower and a resulting investigation by legal counsel. Interestingly, Stonecipher's actions did not directly violate the company's code of conduct as it existed in 2005. But the board concluded that the affair did violate the code's provisions about hurting the company's reputation, adding that the “facts reflected poorly on Harry's judgment and would impair his ability to lead the company.” No doubt other ethics issues surrounding the company at the time led the board to take immediate action on the married Stonecipher's indiscretion. In addition to losing its CEO earlier than had been planned, the company found itself having to dig itself further out of its ethics-related troubles.

And in another well-publicized case, Hewlett-Packard CEO Mark Hurd was ousted in 2010 after a consultant accused him of sexual harassment, and directors decided Hurd was less than honest with the board. It cost Hurd a three-year $100 million contract, though he is one of the few CEOs disgraced by an affair to land a prominent role after the ordeal. Shortly after resigning from H-P he landed a job as co-president of Oracle. From H-P's perspective, the company lost its well-regarded CEO, which started the company down a dark path as it struggled to replace him.

While ethical and moral standards have long been a part of civilized society, the way in which misconduct is viewed in the business environment has evolved. In the distant past we've seen CEOs and other senior executives engage in extramarital affairs without consequence, except perhaps in their personal lives. But that certainly has changed. It's difficult to find any specific turning point, though a circumstance that occurred in one company some years ago provides insight.

In this company, it was not uncommon for senior executives to have extramarital relations with employees, indeed with some even bragging to their colleagues about their trysts. But that began to change when one executive was caught when his angry wife provided information to the company about his affair. Upon investigation by legal counsel, it was learned that not only was the affair occurring, but the executive was paying for hotel and other expenses with company funds. The result was instant termination. But beyond that, an important question was raised—“If an executive is cheating on his or her spouse, isn't there a greater likelihood that the individual will also cheat the company”—which could go well beyond improper expense reporting. In addition to issues surrounding creation of a hostile work environment, the broader ethics of executives came into question. A resulting message was sent and heard throughout the organization, driving meaningful change in the company's culture.

We live in a new world today, where codes of conduct exist, whistleblower channels are in place, and integrity and ethics are valued as part of a company's culture—at least at most companies. With misconduct damaging perpetrators and their organizations alike, we can hope CEOs and other leaders get the message and act accordingly. For those who don't, there will be a high price to pay—for both themselves and their organizations.