Assume a small internet based service company that rarely has physical contact with customers, vendor, partners, etc (once in two years with no reason to see that trend changing). Less than 10 employees, less than a million in revenue a year. The CEO and majority equity owner buys a $5k golf club membership and does not disclose that to any employees or other shareholders. It's obvious that this will be for the CEO's personal use and possibly hosting an external company once every two years. Company also depends on credit during seasonal drops in revenue that are clearly known. Is this unethical, inappropriate, illegal? How should I view the future of this company, especially if this is a growing pattern.
closed as off-topic by HorusKol, Masked Man, Jim G., Lilienthal♦, The Wandering Dev Manager Feb 21 '16 at 17:57
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does not disclose that to any employees or other shareholders
I can't imagine why a CEO would be obliged to disclose such an expense to employees. And it's up to the company directors what level of expenditures require board approval.
Is this unethical, inappropriate, illegal? How should I view the future of this company, especially if this is a growing pattern.
I would characterize this sort of activity as relatively "common".
I don't know if that means it's unethical or inappropriate. You yourself stated that it could result in "possibly hosting an external company once every two years". That could easily be a realistic justification.
(As far as if it is illegal, you need to consult an attorney. My guess is that there is nothing at all illegal about it - but I'm not a lawyer.)
How should I view the future of this company, especially if this is a growing pattern.
I wouldn't want to work at a company where I felt the CEO was actually misusing funds. But that's something you would need to decide for yourself.
Golf courses used to be a major networking opportunity for executives of various companies to get to know each other, and propose deals to each other, informally ... to the point where IBM actually owned a golf course as part of the Poughkeepsie complex. Less so today, but it is not impossible that could be a legitimate marketing expense.
Unless you're the comptroller or an auditor, you probably don't have access to all the facts to evaluate this one way or the other.