A CEO’s Road To Hell
It began with forbidden love and ended in felony charges for Comtech’s Ken Peterman
“Thus with a kiss I die.” ― William Shakespeare
Another CEO has sealed his fate with a kiss.
Comtech, which provides a host of high-tech communications services, did not communicate the reasons why it dumped its CEO when it announced his termination in March.
Now we know. Comtech’s Ken Peterman, 67, had a sexual relationship with a subordinate and didn’t disclose it as required by the company.
We know this because last week federal prosecutors filed insider trading and securities fraud charges against Peterman and arrested him in San Diego. The Securities and Exchange Commission has also filed civil charges.
The indictment alleges that after Peterman learned of the lousy financial performance his company was about to release, compounded with the news of his firing, he began dumping stocks ahead of public announcements.
So much lost for so little
A kiss, a coverup, a firing, felony charges, and possibly a long prison sentence to come. What a slide down the jagged corporate ladder into the fiery abyss. Neither Comtech nor Peterman have commented on the complaints.
This is a guy who made more than $4.5 million in fiscal 2024. But the SEC alleges that he avoided only about $12,445 in losses by trading before the company’s March 18 earnings announcement.
He also told his financial advisor to sell additional shares, but a trading blackout prevented the sale, the SEC complaint says. That unsuccessful scramble would have avoided about $110,000 in losses.
With numbers this small, Peterman’s case seems like a pretty aggressive prosecution given what so many other corporate ne’re-do-wells have gotten away with, but …
A CEO who has an affair with an underling cheats on his company, his shareholders and often his spouse in a single folly.
A man of integrity?
Comtech has long been a losing bet with a stock that has lost about 94% of its value since its 2007 peak. It provides 911 emergency services, satellite technologies and cloud capabilities for commercial and government customers. The company was based in Melville, N.Y., but relocated its headquarters to Chandler, Ariz., in March.
Before this series of blunders, its CEO was a well-respected aerospace and defense executive. You’ve gotta love this brown-nosing piece in CIO Views – which Comtech touted in its annual report.
“Unique and visionary leadership through integrity, passion, and innovation are the qualities that define Ken Peterman. …
“Ken’s passionate, inclusive, and engaging leadership style is guided by empathy, listening, and stewardship. In addition, his high ethical standards prioritize honesty and integrity as the most important personal and organizational priorities.”
It’s the C-Suite, not the See-Sweet
CEOs getting fired for affairs make occasional headlines. Usually, if they’re crafty enough to land in the C-Suite, they likely don’t get caught. And when they do, the company keeps a lid on it.
Still, sometimes the lid gets blown right off, especially when the company is performing badly or is under fire from shareholder activists.
In September, Business Blunders covered the firing of Norfolk Southern CEO Alan Shaw, who was caught in a tryst with the railroad’s Chief Legal Officer Nabanita Nag. It wasn’t the toxic train derailment in East Palestine, Ohio, that did him in. Or the activist investors demanding his resignation. It was forbidden love.
Oh, the folly. Some guys just couldn’t score a prom date in high school, but once they get that CEO cred …
CEOs behaving badly
Getting fired for an office affair is a relatively rare feat for a CEO of a large company, according to a report by Bloomberg.
Bloomberg cites a count by exechange.com, which tracks CEO departures at Russell 3000 companies. It shows there’ve been only seven instances of CEOs ousted for love since 2017.
Because of its plunging stock value, Comtech’s market capitalization has fallen to $98 million and was subsequently dropped from the Russell 3000 index in July, so it doesn’t count in this tally.
Comtech stock was already in free fall when Peterman took the helm in August 2022 and it has since plummeted more than 70% during his tenure.
Besides Norfolk’s Shaw, the exechange count lists these dalliance-related CEO departures:
Helios Technologies CEO Josef Matosevic – July 2024.
CBOE Markets CEO Ed Tilly – August 2023
Helios Technologies CEO Wolfgang Dangel – April 2020 (Yes, it happened at the same company twice.)
McDonald’s CEO Steve Easterbrook – November 2019
Kemet Corp. CEO Per-Olaf Loof – December 2018
Intel CEO Brian Kranzanich – June 2018
The report didn’t include BP CEO Bernard Looney, who resigned in September 2023 following affairs with colleagues. And this is also in a different category, but let’s not forget CNN President Jeff Zucker who stepped down in February 2022.
“I was required to disclose it when it began but I didn’t,” Zucker said in a statement. “I was wrong. As a result, I am resigning today.”
Going back further, there are plenty more instances of CEOs who departed following affairs or inappropriate sexual conduct:
Priceline CEO Darren Huston in April 2016
American Apparel CEO Dov Charney in June 2014
Best Buy CEO CEO Brian Dunn in April 2012
Highmark CEO Kenneth Melani in April 2012
Stryker CEO Stephen MacMillan in Feb. 2012
Hewlett-Packard CEO Mark Hurd in Aug. 2010
Starwood Hotels CEO Steven Heyer in April 2007
Boeing CEO Harry Stonecipher in March 2005
These are just the macho honchos who got caught and then had the misfortune of being outed. Case in point: Comtech kept it on the QT for months and it wasn’t exposed until insider trading charges were filed.
The trend is likely broader than anyone knows.
Who is Ken Peterman?
Somehow, Comtech ended up picking this guy after conducting a national search for a CEO. The company was pretty damn proud of him. Here’s how it described him in its fiscal 2023 annual report:
Mr. Peterman has enjoyed a distinguished career as a thought leader and innovator in the challenging aerospace and defense technology sector, successfully leading large, complex, global enterprises to achieve differentiated growth in a variety of diverse market environments. Mr. Peterman has won multiple awards for his innovative leadership, including:
TOP 10 MOST INNOVATIVE CEOs: CIO Views Magazine 2022
TEN BEST INNOVATIVE BUSINESS LEADERS: Industry Tech Outlook 2020
BUSINESSMAN OF THE YEAR: Battlespace Magazine 2018
GAME CHANGER AWARDEE: Vanguard Magazine 2018
As President, Viasat Government Systems (2013-2021), Mr. Peterman led a global defense business to greater than $1 billion in annual revenue. …
As Founder and CEO of the SpyGlass Group (2012-2022), Mr. Peterman led an innovative thought-leading organization that helped strategically shape aerospace and defense technology trajectories in the mobile networking, cybersecurity and satellite technology sectors.
As President, ITT (and then Exelis) Communications and Electronic Warfare Systems (2007-2013), Mr. Peterman led a global defense and aerospace business of greater than $1 billion in annual revenue.
It was a stellar career until it wasn’t. Just goes to show that it doesn’t take much to send a 40-year career up in smoke.
“Ken Peterman allegedly acted on non-public information of the company’s confidential fiscal reporting and his pending termination to avoid financial repercussions,”said James Dennehy, assistant director in charge at the FBI’s New York Field Office. “This alleged attempt at self-preservation exploited a respected position and disrupted public confidence in future financial leadership.”
Was she worth it?
Considering the loot that companies pay top executives, they have a right to insist that their C-Suite Romeos get their lovin’ anywhere besides the office. And any CEO willing to risk a multimillion-dollar gig for an affair is not to be trusted as a decision maker.
Peterman is a prime example, standing accused of capping his affair, and subsequent firing, with impulsive stock trades.
They say it’s lonely at the top, but for Peterman it could prove even lonelier in prison.
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