CEO health in spotlight after legend’s death
Execs reluctant to surrender privacy
MILAN: Fiat Chrysler Automobiles NV’s late founding CEO Sergio Marchionne was a notorious workaholic who regularly slept on a corporate jet while landing in the headlines for his shrewd deal-making. Despite his very public profile, he kept a secret even from his board: he’d been seriously ill for more than a year.
Following his sudden death last week at 66, the revelation that Marchionne had kept his illness from his company and closest executives for so long has rekindled a debate over what information top executives should share about their personal life with their companies and shareholders.
Most experts believe CEOs have a right to privacy, especially where their health is concerned. But some say that coming forward would help break taboos on workplace illness for other executives and workers.
Top executives also need to take into account their role as a corporate officer when weighing what personal information they divulge — first to their boards, then to their workers and the wider investing community.
“I think it is classic stuff really. When you are a senior person, to be ill, there is a stigma to it,’’ said Cary Cooper, an expert in organisational psychology and health at the Manchester Business School in Britain. “In this case, he might have thought it would adversely affect the company, or that he wouldn’t be allowed to carry on.’’
Cooper noted that the CEO of Lloyd’s Bank Plc, Antonio Horta-Osorio, had disclosed his struggle with depression, helping to open up a discussion about mental health.
At the same time, many captains of industry are not willing to show their physical limits and see illness as just another obstacle to overcome.
“The kind of people who get to the top are pretty resilient people, and they think they are going to overcome it anyway,’’ Cooper said.
Marchionne’s case was unique because he was singularly identified with the automaker he created from two failing companies. Financial analysts, considering his plans to step down in the spring of 2019, had already expressed concern about whether any successor would be able to demonstrate his level of creativity and flexibility, most recently when Marchionne last month laid out the carmaker’s five-year plan.
“I do not believe CEOs are under any legal obligation to disclose their health issues,’’ Jason Schloetzer, a business administration professor at Georgetown University, said.
But he added: “It would be nice for there to be an internal process through which not just the CEO, but any key member of the operating team can feel comfortable sharing personal issues that may be a risk factor to company performance.’’
Jeffrey Sonnenfeld, senior associate dean for leadership studies at Yale School of Management, said CEOs “have a moral, ethical and legal responsibility ... as an officer of the company to consider the material adverse consequences of this very important information. As an officer, you surrender some degree of privacy.’’
“That includes not only disclosing who you do business and meet with but also health issues,’’ he said, adding it’s up to corporate boards to have rules in place about health disclosures.
Sonnenfeld cited JPMorgan Chase & Co CEO Jamie Dimon and Goldman Sachs Group Inc CEO Lloyd Blankfein — both of whom informed their boards and employees of their cancer diagnosis, continuing full duties after treatment — as two good models.
Apple Inc, on the other hand, knew about Steve Jobs’ illness “but put out misinformation’’ when the founding CEO failed to show up at MacWorld in 2008, he said. “That was worse than spins. It was falsehoods.’’
“The lesson from the Marchionne case is that boards need to think about having some kind of procedure where there is some periodic checkup on the CEO’s health, or some kind of advanced agreement that the CEO will let them know about medical information,’’ said Doug Chia, executive director of the governance centre at the Confidence Board think tank.
Giuseppe Berta, who has written books about Fiat and Fiat Chrysler and who knew Marchionne, expressed surprise that heir to the Fiat-founding Agnelli family, FCA chairman John Elkann, had not known about Marchionne’s illness.
“Evidently, the ties between Marchionne the manager and John Elkann the shareholder were by now very deteriorated,’’ he said. “Under normal circumstances, something of this sort would emerge.’’
While Marchionne had put FCA on a strong financial footing, having eliminated debt as long promised, Berta said hewing to that goal also meant that the carmaker did not make the investments in new products that competitors did, including for electric cars and looking ahead to greater automotive connectivity and autonomous driving.
He speculated it was Marchionne’s desire to put the company on firmer ground to meet the goals in the five-year-plan he laid out on June 1 that led him to hide his illness.
Such gestures, however, are useless hubris, experts say.
“Nobody — and I mean nobody — is indispensable,’’ Manchester Business School’s Cooper said. “Everyone said ‘What is going to happen to Apple after Steve Jobs?’ Has it done badly?’’