Johnson Controls fires consultant
Johnson Controls Inc. fired a consulting firm after learning that one of its principals had an extramarital affair with Chief Executive Officer Alex Molinaroli.
Molinaroli, 55, told his family about his affair with Kristin Ihle, a 45-year-old psychologist, in late May, according to the transcript of a court hearing at which Ihle unsuccessfully sought a restraining order against the CEO’s estranged wife. Ihle’s Milwaukee company, which helps businesses with leader development and succession planning, had been working with auto supplier Johnson Controls for years, according the consulting firm’s website.
“The board reviewed the referenced relationship and determined that no conflicts of interest occurred,” Fraser Engerman, a Johnson Controls spokesman, said in an e-mailed statement. “To avoid any perception or potential future conflicts, management elected to terminate the consulting firm. Mr. Molinaroli continues in his role with full support of the board, and the company considers this matter to be closed.”
Corporate directors are increasingly watchful of executive behavior because they are being held accountable for governance. In recent years, top executives at Best Buy Co. and Lockheed Martin Corp., among others, have lost their jobs after getting caught having a relationship with a subordinate. Even when boards find no conflict of interest, directors are more willing to take action because management can be distracted, or perceived as distracted, by affairs in the C-suite.
“Marital infidelity is not a new phenomenon,” said Larry Hamermesh, a professor at Widener University’s law school in Wilmington, Delaware, who specializes in corporate law. “What may be new is a sense of less tolerance of it in affecting business relationships. I think there’s probably been some cultural evolution on that front and it’s seeped into board rooms too.”
Molinaroli was promoted chief executive a year ago after 30 years at a company that was once the largest U.S. auto supplier. Under his leadership, Milwaukee-based Johnson Controls is reducing its reliance on the cyclical car industry and refocusing efforts on its building-efficiency business. The company sold an auto-electronics business to Visteon Corp. in July, and plans to divest a unit providing facilities and energy management. The stock has risen 6.3 percent since he became CEO, while the Standard & Poor’s 500 Index gained 15 percent.
Ihle, who holds a doctorate in psychology, separated from her husband last year, according to a court transcript. The couple filed for divorce in July.
Ihle, a principal at Lichter & Ihle, told the restraining order hearing officer that she is the majority owner of the firm, which also provides executive coaching.
“Our firm reached an amicable separation with Johnson Controls and considers the matter closed,” Ihle’s company said in a statement provided by her lawyer, Tom Hayes.