AOL CEO Tim Armstrong Apologizes For Comments - Again

If you’re on AOL’s AOL Board of Directors, how do you handle a CEO who is turning in positive earnings numbers yet continually makes some pretty big PR blunders?

That’s the case with CEO Tim Armstrong.

AOL reported 13 percent revenue growth along with numbers that beat analyst expectation on February 6, but those positive numbers were quickly overshadowed when CEO Tim Armstrong opened his mouth.

This time, it had to do with proposed changes to the company’s 401(k) plan.

Last week, Armstrong announced to employees that the new plan would still match employee contributions up to three percent of annual pay but it would be paid in a lump sum at the end of the year instead over the course of the year.

This alone angered employees because they wouldn’t have the benefit of investing it throughout the year and if an employee left the company, they would forfeit the employee match.

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But what really angered employees and the general public was his reasoning. Armstrong said that the changes were made to offset rising employee healthcare costs including 2012 expenses from two employees with “distressed babies” that cost the company $1 million each.

Although he tried to spin it as saying healthcare was more important than retirement, the comment still caused public outcry. One of the two mothers wrote publicly, “All of which made the implication from Armstrong that the saving of her life was an extravagant option, an oversize burden on the company bottom line, feel like a cruel violation, no less brutal for the ludicrousness of his contention.”

Over the weekend, Armstrong was forced to backtrack. “We heard you on this topic,” Armstrong, 43, said in the memo. “I made a mistake and I apologize for my comments.”

Nobody has forgotten Armstrong’s public firing of a creative director in front of a room full of employees in August. He later had to apologize for the incident as it also sparked a public outcry.

No company wants the reputation of not being people-friendly. Every Board of Directors knows that PR gaffes like this are bad for business. How long it can continue to look the other way as Armstrong clearly hasn’t learned the art of diplomacy is on the minds of investors.

Possibly the only thing keeping Armstrong at the helm is the positive momentum that seems to be behind AOL.

Disclosure: At the time of this writing, Tim Parker has no position in the above-mentioned company.

Posted In: NewsEventsTechAOLTim Armstrong
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