A Healthy Approach to CEO Illness

How should companies cope with a leader’s health crisis?

Obviously there are many factors to consider when assessing if a material event is occurring. Such factors include the seriousness of the illness; whether it will make it difficult or impossible for the executive to continue his daily leadership duties and responsibilities; whether there will be a brief or prolonged absence from the company; and the impact of the treatment on the executive’s daily functioning. It is up to company directors to determine if an event is material. In practice, however, the decision made by the board assessing materiality is often one based on emotion and interpersonal dynamics, rather than objective facts.

Apple’s Steve Jobs was secretive about his pancreatic cancer and later took a leave of absence; more recently, JPMorgan Chase’s Jamie Dimon disclosed his diagnosis of throat cancer to the public. In his direct and straightforward manner, he made it clear the company would continue under his leadership during his medical treatment. Similarly, Lloyd Blankfein of Goldman Sachs revealed his recent diagnosis of lymphoma and his determination to work throughout his treatment.

Steve Jobs’ struggle with his illness, his refusal to accept both appropriate treatment, and counsel from his board (including Art Levinson, CEO of Genentech at the time, and Andy Grove, CEO of Intel, himself a cancer survivor), is well documented in Walter Isaacson’s biography of Jobs. It was clear the board was divided about how much to disclose: Al Gore felt they followed advice of counsel and respected Jobs’ wishes for privacy; Jerry York on the other hand, confided to the WSJ, comments that were only revealed after his death, that he was “disgusted” by the extent of company concealment with regard to Jobs’ health problems.

The decision regarding how much information to reveal may be unwittingly based on complex emotional factors, rather than what is materially in the best interests of the company.

Moving forward
Since a CEO’s and a company’s reaction to a health crisis cannot be predicted—none of us truly knows how we would cope with a serious illness—companies should have plans and policies in place to handle the possibility of a leader’s infirmity. Companies can do a great deal to prepare for inevitable traumas such as serious illness in the CEO.

Untitled-1The board’s concerns must be focused on the sustainability of the company. In situations where the CEO’s agenda differs from the shareholders’ interests, the board must deal sensitively with the conflict, while addressing it in a straightforward manner.

In addition to having contingency and succession plans and updating them annually—many companies do not—it is critical to create a climate in which discussing “undiscussable” matters is firmly rooted as part of board and company culture.

The board must value and model transparency and “walk the talk”—by demonstrating in its board process and in its everyday work with the CEO—that transparency and honest collaboration are essential to its work and to the culture of the company.

This dialogue generally only takes place when the board has engaged in a serious and robust evaluation process of its own that acknowledges the critical importance of an open and collaborative board dynamic.


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