If a firm's CEO dies, what then?
It is an issue every board of directors must consider.
Published: Sunday, August 1, 2004 at 6:01 a.m.
Last Modified: Saturday, July 31, 2004 at 11:24 p.m.
BOISE, Idaho - It's a morbid issue, but one every board of directors has to address. What happens if the firm's CEO or chairman dies suddenly?
CEO succession should occur seamlessly, whether it's a sudden or planned management departure, to ensure shareholder value and keep speculation at a minimum, said management assessment consultant Ted Bililies.
But that doesn't always happen.
``In U.S. corporations, there is a frightening absence of logical, rational planning in this area,'' said Bililies, a partner in ghSmart in Massachusetts. ``I certainly hope Micron has someone, or several people, in the wings.''
``Micron'' is Micron Technology, which got a scare in early July when the man who holds the company's top three titles - chairman, president and CEO - smashed his small aircraft into the desert near Boise.
Steve Appleton survived, with only an overnight stay in the hospital and some stitches to his forehead. In any case, Micron executives say the firm has a plan in place that guarantees it won't be left without a leader.
``Micron's board periodically reviews the succession plan, and they are knowledgeable of the internal candidates, both for the CEO position, as well as other executive positions,'' said Micron spokesman Dave Parker.
The smart plan, said Bililies, is for a current CEO and the board of directors to routinely review potential ``stars'' in the company and prepare them over time for leadership roles.
According to the Business Roundtable, an association of CEOs of 150 large U.S. companies, it is the board of directors' responsibility to plan for management succession, including for the CEO and other senior managers.
McDonald's Corp. didn't hesitate when its chairman and CEO, Jim Cantalupo, died suddenly of a heart attack in mid-April.
``There were eight members of our board at that convention, and they met at 6:30 that morning, just a couple hours after he passed away, and began deliberating,'' said Walt Riker, vice president of corporate communications for McDonald's in Oak Brook, Ill.
By the time news was out about Cantalupo's death, the board had already elected a new chairman and CEO.
``There was a plan in place,'' said Riker, about the board's swift action.
``It prevented any kind of speculation or wild guessing or leaving a void where there were questions about who's in charge. That's not healthy for a company.''
Micron's board is tolerant of Appleton's penchant for risky hobbies, Parker said. ``Steve's hobby of flying airplanes is part of who he is, of his competitive and dynamic nature,'' Parker said.
But Bililies, the management consultant, said a CEO should certainly consider whether his personal interests are in conflict with shareholder interests.
``Is it negligent or irresponsible for a CEO to do loop-de-loops in an airplane? In my personal opinion, I would say so," Bililies said.
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