After months in the shadows, a high-stakes drama of sex and betrayal among the loftiest echelons of Stanford University burst into the open Monday, as the school announced that Garth Saloner would step down as dean of the Graduate School of Business.
The shocking announcement came shortly before a news report linking the South African-born economist to a wrongful termination suit by a former Stanford professor whose wife was allegedly having an affair with Saloner.
With salacious details of an office romance, the bitter fallout from the firing and allegations of fear and revenge inside the business school’s inner sanctum, the dean’s resignation could have tongues wagging.
“I have decided that it is in the best interests of Stanford and the GSB, two institutions that I love, that I step down,” Saloner, who is widowed, said in an email to the school community at the start of its academic year. “As many of you know, the university and I have been vigorously defending a baseless and protracted lawsuit related to a contentious divorce between a current and former member of our faculty. I have become increasingly concerned that the ongoing litigation and growing media interest will distract all of you from the important work that you are doing and unfairly impact this stellar school’s deserved reputation.”
News of Saloner’s resignation, which takes effect at the end of the current academic year, stunned the Stanford campus where students were unaware of the scandal playing out for months in two Silicon Valley courthouses. Saloner is a well-liked and inspirational leader who expanded Stanford’s educational role around the globe, a gifted fundraiser and brilliant scholar. His top-drawer resume includes a 1977 MBA from his native country’s University of the Witwatersrand as well as assorted degrees from Stanford.
In announcing the departure, Stanford pointed out that the Graduate School of Business had raised over $500 million in private support since Saloner took the helm of the school, a veritable entrepreneur factory regularly minting graduates who quickly command salaries, according to Forbes, of $255,000 a year.
The school did not make Saloner available for comment. But Stanford President John L. Hennessy expressed regret over the announcement, praising Saloner for his “very successful tenure.”
“We are grateful to Garth for his service and his many contributions as dean, and look forward to his continued contributions to teaching and research at the GSB for many years to come,” Hennessy said of Saloner, who plans to return to his teaching and research as part of the school faculty.
The news came just after publication online of a lengthy article by Oakland, Calif.-based journalist Ethan Baron in Poets & Quants, a news website devoted to the coverage of business schools. In the article, which Baron told the San Jose Mercury News he had been working on since last winter, he presents a long and troubling narrative of marital infidelity, titillating emails and bitter infighting among members of Stanford’s elite business faculty.
In the article, headlined “Stanford Confidential: Sex, Lies And Loathing At The World’s No. 1 Business School,” Baron lays out both the bitter divorce of the two Stanford professors at the center of the drama and the firing of one of them that triggered the lawsuit against Saloner and Stanford.
From Baron’s opening passage — “Knife. Penis. Town square. Got it.” — the story was surely destined to be a must-read.
“Those six words don’t yet mean anything to the 400 MBAs-to-be of storied Stanford Graduate School of Business’s incoming class who rightly believe they have grasped a platinum ticket to the top,” he wrote. “But that will change fast as they struggle to understand why Garth Saloner stepped down today as dean of what is widely regarded as the best b-school in the world.”
In his sizzling page-turner, Baron outlines the many moving parts of the scandal. According to court documents, Saloner became romantically involved with Deborah Gruenfeld, a business professor described as “a social psychologist whose research and teaching examine how people are transformed by the organizations and social structures in which they work.” Baron also describes her as a board member of LeanIn.org, the organization started by Facebook COO Sheryl Sandberg.
Gruenfeld’s husband, former Harvard wrestling champ and now terminated Stanford business professor Jim Phills, filed for divorce from her on Dec. 7, 2012, after they had separated in June by what Baron calls “mutual accord.” They have two daughters, now 11 and 14. Phills, 55, and Gruenfeld, 54, had married in 1999, and started at Stanford in 2000, both as organizational behavior professors.
“Phills, the professor/husband, was fired April 3, 2014, from his full-time job teaching in the GSB MBA program, with the termination effective June 3 of this year,” the article states. “Phills’ lawsuit was filed a day before he was fired, but court filings indicate the termination had been in process before the lawsuit was filed, suggesting coincidental timing.
“In the wrongful termination suit, Phills accuses Saloner of railroading him out of the business school while sleeping with his wife. Saloner and Plaintiff’s wife Deborah Gruenfeld, who also happens to be Saloner’s subordinate, carried out a clandestine intimate relationship while Saloner was making decisions about Phills’ employment and home loans,’ Phills’ lawyers claim in a May court filing.”
Attorneys for Stanford and Saloner, who could not be reached for comment, are challenging Phills’ lawsuit, which he brought April 2014. In a statement, Stanford called the case the “unfortunate outgrowth of a lengthy and contentious divorce proceeding involving Dr. Phills and his estranged wife, a member of the faculty. Dr. Phills’ lawsuit falsely claims that he was a victim of discriminatory treatment at Stanford.
“Several months after the couple’s separation,” the statement said, “Dr. Phills’ estranged wife and Dean Saloner, who was widowed, began a relationship. The dean informed Stanford leadership at the very beginning of the relationship, and others in the university took responsibility for final decision-making about matters involving Dr. Phills and his wife. At all times Dr. Phills was treated fairly and equitably.”
A spokesman for Phills said he was not yet ready to speak publicly about the events surrounding his termination.