Forbes explains – Which CEOs made the most egregious errors in 2015? Was it the pharma boss who raised the price of a life-saving medication by more than 5,000%? The Brazilian oil company CEO whose executives stand accused of running an epic bribery scheme that destabilized her country’s economy? Or the former billionaire CEO whose company is being investigated for Enron-like accounting?
Martin Shkreli, former CEO, Turing Pharmaceuticals
In September, the 32-year-old former hedge fund manager who founded Turing early this year, became the latest poster child for corporate greed after Turing hiked the price of a decades-old, potentially lifesaving drug, Daraprim, from $13.50 per tablet to $750. (Shkreli recently claimed on Twitter that if a patient doesn’t have insurance that will cover the drug, “you can have it for free.”)
On Dec. 17, he was indicted for securities fraud related to his conduct at two hedge funds he previously ran, and at Retrophin, a company that bought old drugs and jacked up their prices (he has pleaded not guilty). Retrophin, which ousted Shkreli as CEO in 2014, had filed a suit against him, accusing him of using the company as a personal piggy bank, enriching himself and paying off investors who had lost money at his hedge funds.
Federal authorities, whose indictment tracks the Retrophin suit, said Shkreli committed “a securities fraud trifecta of lies, deceit and greed,” and the SEC’s enforcement director said Shkreli “should be barred from working in the securities industry or from being the director or officer of a public company.”
Shkreli resigned as CEO of Turing on Dec. 18. He is still CEO of KaloBios, a drug company he acquired in November by buying 70% of its stock.
Michael Pearson, CEO, Valeant
Shares in the drug maker plunged from $262 in August to a low of $70 in November and Pearson, who became CEO in 2010, is no longer a billionaire. He has a large equity stake in the company he can’t sell until 2017.
Pearson’s strategy, to ditch R&D, buy other drug makers and jack up prices (it raised the price of one old heart drug, Isuprel, by 500%), eventually sent the stock tumbling, when a report from a short seller criticized the practice and said the company was making fake sales and deliberately sending retailers more drugs than they could sell. Observers started questioning whether Valeant’s deal-making was hiding accounting fraud (Valeant denies the claims).
Federal prosecutors in Manhattan and Boston sent subpoenas seeking information about Valeant’s financial assistance programs for patients, its pricing and its distribution methods. In October Joe Nocera of the New York Times wrote an op ed headlined, “Is Valeant the Next Enron?”
Maria das Graças Silva Foster, former CEO, Petrobras
In February, Graça Foster, who grew up in a Rio favela and recycled cans to pay for her education, quit as the CEO of Petrobras after 30 years at the oil giant. Prosecutors say that starting in 2004, some of the country’s biggest construction firms paid bribes in exchange for $23 billion in Petrobras contracts. Authorities charge that companies colluded to drive up prices while kicking back money to top Petrobras employees and politicians.
Graça Foster was not implicated but investors lost faith in her leadership as the scandal damaged the Brazilian economy, threw thousands of people out of work and sparked outrage at the alleged looting of the company, which is 51% owned by the government. If she didn’t know about the bribery scheme, she should have.
Elizabeth Holmes, CEO, Theranos
In the face of mounting questions about the effectiveness of the finger-stick blood tests invented by the diagnostic startup she founded in 2003, Stanford dropout Holmes, 31, the world’s second-youngest self-made billionaire after Mark Zuckerberg (she’s worth $4.5 billion), has insisted the claims are being made by competitors and disgruntled former employees and providers. Theranos also said that journalists, especially John Carreyrou at the Wall Street Journal, approached their stories with a bias against the company.
Despite claims that it would be able to do more than 200 tests using the finger-stick method, Theranos currently offers not even a single such test to the public. For many of its other tests, it has conceded that it uses conventional samples drawn by needles. (Theranos says it has submitted more than 120 tests for FDA approval.) Says Yale’s Jeffrey Sonnenfeld, “There is a nagging fear that the situation at Theranos calls up American health care’s long history of hucksterism.” In October drug chain Walgreens said it would halt expansion of Theranos testing centers.
The Theranos board is made up of impressive names like Secretaries of State Henry Kissinger and George Shultz, former Secretary of Defense William Perry, former Senators Sam Nunn and Bill Frist, General James Mattis, and Admiral Gary Roughead. Aside from Frist, none of these people bring medical expertise. “You can’t rely on such public officials to weigh in knowledgeably about the development of new blood diagnostic methods,” wrote Sonnenfeld in November.
Marissa Mayer, CEO, Yahoo
Though the 20-year-old search engine portal was in bad shape when the former Google superstar took the helm in 2012, the company’s core business now has an implied market value of less than zero.
A string of top executives continue to quit and Mayer has failed to bring on needed talent. In January she fired Google veteran Henrique De Castro, whom she’d hired as chief operating officer just 15 months before. He reportedly pocketed as much as $109 million in compensation and severance.
She has spent $3 billion on acquisitions but only one of them, Tumblr, has made a mark. She has passed up on other companies that would have arguably been much more lucrative, like Snapchat or Netflix before their values soared.
During her pregnancy and after the birth of her son and twin daughters, Mayer announced she planned on “taking limited time away and working throughout,” an example damaging to parents who want and need paid company leave.
