Board dealings with a disabled CEO: individual CEOs and situations vary, but knowing what might happen and being prepared are the first lines of defense.

AuthorRobins, Robert
PositionChief executive officers, crisis management

WHEN 77-YEAR-OLD Israeli premier Ariel Sharon suffered a stroke, the public and the press expressed surprise (and the Israeli stock market fell 4 percent)--although Sharon was obese, had a highly stressful occupation, and had already experienced a stroke.

Sudden, disabling illnesses always come as a surprise. That's why boards are so seldom prepared for them.

Michael Dell, at 41, is the youngest CEO of a Fortune 500 firm. Most CEOs are older, and some a lot older. William Dillard, CEO of Dillards Inc., died three years ago at 87. According to Forbes, the average CEO is in his mid-50s. Not surprisingly, many of these leaders fall ill, and, equally unsurprisingly, those illnesses create problems for the directors who are responsible for overseeing company management. The accompanying table highlights 25 instances of media-reported CEO disability, defined here as a compromised ability to carry out the responsibilities of the office. It is safe to assume that many cases of CEO disability never reach print. Indeed, many are masked within the company itself.

Key deteminations

Not all CEOs are the same and not all disabilities are the same, but knowing what might happen and being prepared are the first lines of defense. Here are determining variables to take into consideration.

* Whether the specific nature of the illness itself is the principal driving force. A passing, though severe, illness--for example, a serious but non-fatal heart attack--can be coped with by temporarily substituting a No. 2 officer or even a member of the board. For example, when Kraft Foods Inc. CEO Michael Deromedi was hospitalized for what was originally described as an undiagnosed medical condition (but later turned out to be a severe viral condition), Kraft Chairman Louis Camilleri took temporary charge, with no adverse effects to the company.

Long and variable illnesses, especially ones involving cognitive or emotional dysfunction, are much more problematic. The ill CEO may deny his disability and resist change. The senile Henry Ford's last year's were nearly catastrophic for the company he founded.

An additional problem occurs when the illness, such as atherosclerotic dementia (vascular dementia), fluctuates in severity. The CEO may be coherent in the morning but not in the afternoon; fine when otherwise healthy but disengaged when suffering from a bad cold. One board member reports a conversation with him as being as good as ever, but another the following day finds the CEO unable to engage in a simple chat. Real estate entrepreneur Harry B. Helmsley exhibited variable dementia until he was replaced. He and his...

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