Last month, JPMorgan Chase CEO Jamie Dimon went to Congress and apologized for the firm's massive $3 billion-plus loss in proprietary derivatives trading.

“We made a mistake. I am absolutely responsible,” Dimon told the Senate Finance Committee that invited him to explain what happened. “We have let a lot of people down, and we are sorry.”

Just weeks earlier, he had made a similar mea culpa to shareholders. “This should never have happened. I can't justify it. Unfortunately these mistakes were self-inflicted. What this hedge morphed into violates our own principles of complexity and risk,” he said at the firm's annual shareholder meeting.

Dimon isn't the only one struggling to find the right words to say he's sorry. His statements follow a series of CEO and board apologies for mistakes or lack of oversight in the course of their official capacities, although it stands out as one of the more frank and blunt apologies to date.

So, when is a corporate chieftain's public apology an appropriate course of action and what goes into that decision? And, in the decision-making process, is there a natural tension between those responsible for protecting the CEO's reputation along with the company's brand equity and the legal guardians' concerns that publicly admitting a mistake could lead to shareholder lawsuits?

Before answering these questions, consider other examples of CEO and board apologies to the public. Just a week before Dimon's apology, Citigroup CEO Vikram Pandit was forced to apologize, after shareholders rejected his $15 million compensation package. Although the sincerity of his sorry is still up for debate: Pandit apologized to Citigroup's employees and shareholders not for the poor performance of the bank or the size of the sum, but for not doing a better job of explaining the executive compensation plan.

In a situation similar to Citigroup, Barclays' Chief Executive Robert Diamond, Jr. and Board Chairman Marcus Agius faced angry shareholders in a packed London concert hall over paying million-dollar bonuses to the bank's senior executives while earnings and the share price fell. Diamond was reportedly booed when he took his seat at the annual meeting and the audience broke into laughter when Agius attempted to defend Diamond's $10 million pay for 2011 saying he had made progress over the past two years in accepting the “new reality of remuneration levels across the banking industry.” This highly tense situation drew an admission from Barclay's management that it and the board had not communicated enough with the shareholders regarding the executive compensation plan.

If a CEO's actions raise continuing questions of honesty and integrity, an apology does little good and the CEO is often forced out the exit.

Yahoo's now former CEO Scott Thompson apologized in late May to his employees over stating on his résumé that he had earned degrees in computer science and accounting from Stonehill College near Boston. Thompson later admitted he had only received an accounting degree.

His admission of guilt did little for his standing as CEO, as he was eventually forced to step down. It was a boon to Daniel Loeb, however. The Yahoo activist investor, who discovered the discrepancy in a Google search, leveraged the situation to gain a board seat for himself, along with seats for two of his designees.

There's no shortage of others lately. News Corp. CEO Rupert Murdoch has delivered several public apologies for the company's phone-hacking scandal that has resulted in a slew of resignations of top News Corp. officials and even a few arrests. Perhaps no corporate apology was more difficult than the one Murdoch delivered to the parents of Milley Dower, a murder victim, who was apparently a target of phone hacking.   

And who can forget the public, blanket apology that Goldman Sachs CEO Lloyd Blankfein issued for the firm's role in the entirety of the financial crisis? “We participated in things that were clearly wrong and have reason to regret,” Blankfein said a news conference in New York in November 2009, before adding, “We apologize.”

It took BP CEO Tony Hayward some time to come around to taking the blame for the Gulf Oil Spill. After he angered many with his bold assertion that he would “like his life back,” he eventually found contrition. “The Gulf spill is a tragedy that never should have happened … I'm sorry,” he said during a June, 2010 press conference.

Facing Up to It

I personally witnessed a CEO apology that still stands as one of the most uncomfortable situations I have faced in my professional career. In February 2006 I was invited to speak, as president and CEO of the National Investor Relations Institute at RadioShack's annual investor conference to about a hundred portfolio managers and brokerage firm analysts.

The day before the address, the Ft. Worth Star-Telegram broke news that CEO David Edmondson had “misstated” his academic record, claiming degrees he didn't have. The theme of my speech was the importance of integrity and full disclosure in a company's relationship with the investment community. Edmondson took a seat at the head table directly facing me on stage. When I talked about integrity being essential to credibility and reputation, all eyes turned to the CEO who was fired by his board the next morning. In his departing statement, he said, “I apologize to the board and the employees for the confusion I have created by carrying erroneous information on my résumé and mishandling my explanation of it.”

For advice on making a decision to have a CEO or the board make a public apology, I turned to Matt Barkett, managing director of crisis practice at Cleveland-based Dix-Eaton, a corporate communications and investor relations firm. Barkett is a veteran of the 2006 Sago and 2010 Massey Energy mining catastrophes, the 2009 Colgan jet that crashed near Buffalo New York killing 50, and the 2010 San Bruno California gas line explosions. Barkett says:

If you make the decision that an apology is the best course of action, do it without reservation and don't cut corners. The worst thing any company or CEO can do is offer a half-hearted apology that no one believes is sincere or one that the legal department has watered down so heavily out of liability concerns that no one can understand its actual meaning.

Don't apologize for anything and everything just because you think that's what is expected when a customer, shareholder, or activist complains. If you're in the right, and the person/entity is using you to gain publicity or financial advantage, stick to your guns and make clear why you acted in the manner you did or why you have the policy you do.

Don't wait too long before deciding a course of action. If you are going to make an apology, do it promptly. Waiting until you “see how things go” waters down an apology's effectiveness, while one that is decisive and prompt carries greater weight and as such helps achieve the important objective of minimizing brand damage and shortening the news cycle.

Possible legal liability or arrogance are not good reasons to avoid an apology. Legal considerations are important, but so is brand equity. If your customers turn on you because they think you should apologize but you don't because you're afraid of getting sued, you'll suffer financially anyway. Get some smart lawyers to work with your PR team to help find a solution, not to stand in the way. The same goes for arrogance and hubris. Find some people you trust who will judge you honestly and ask their opinion of what you should do—if offering an apology is obvious to them, then it should be obvious to you.

From these examples one might conclude that apologizing for failing to communicate clearly and adequately with shareholders can position a CEO as contrite and determined to repair his or her mistakes. However, if a CEO's actions raise continuing questions of honesty and integrity, an apology does little good and the CEO is often forced out the exit.