In Case of Emergency Many Companies Aren't Prepared for Loss of CEO

St Louis Post-Dispatch (MO), July 24, 1994 | Go to article overview

In Case of Emergency Many Companies Aren't Prepared for Loss of CEO


The sudden quadruple heart-bypass for Walt Disney Co. Chairman Michael E. Eisner last week is focusing new attention on a sensitive subject in executive suites.

Are U.S. corporations prepared for serious illnesses or even sudden deaths of their top executives?

Many companies do not have succession plans in place, experts say.

"Most CEOs believe they are invincible and nothing is going to happen to them," said Michael G. Switzer, chairman of TBWA Switzer Wolfe, a major St. Louis advertising agency.

Switzer knows better.

Five years ago, Switzer's partner, Daniel J. Kerlick, drowned while swimming in the Lake of the Ozarks. Kerlick, 35, was chief executive of fast-growing Kerlick Switzer & Johnson Advertising Inc.

Kerlick's sudden death on a Friday afternoon came in the final stages of critical negotiations to sell Kerlick Switzer to TBWA, a much larger international firm.

Switzer recalls a numbing whirlwind of weekend meetings with lawyers, TBWA officials and Kerlick's family. Torn between his personal grief and the business' future, he met Monday morning with the firm's employees to discuss his partner's death, how the merger would proceed, what staffing changes would be made and how employees should talk with clients.

"You have all the immediate demands on you when you are at your least equipped to deal with them," Switzer said. "I think candor is called for, but a firm plan of action is definitely needed and needs to be articulated as well."

How vulnerable are executives and their companies to such unexpected events?

Consider this. In just the last few months:

Disney's Eisner, who had been attending an investment conference, had to undergo emergency heart surgery last weekend.

Prior to Eisner's surgery, Disney President Frank Wells died in a helicopter crash in April.

At Tenneco Inc., a chemical and natural-gas concern in Houston, Chairman Michael H. Walsh, 51, died in May from brain cancer.

James K. Batten, 58, chairman and chief executive of the Knight-Ridder Inc. chain in Miami, is undergoing radiation and chemotherapy treatments after doctors removed a brain tumor earlier this month.

And in the world of politics, Illinois Gov. Jim Edgar underwent an emergency quadruple coronary bypass earlier this month.

John M. Nash, president of the National Association of Corporate Directors, says chief executives and their boards must wake up to the need for succession planning. The association is a not-for-profit educational group in Washington for corporate board members.

Whether it be ego, power, control or other concerns, too many CEOs and too many friendly boards are ignoring what could be a potential timebomb, he says.

"Being a human being you are vulnerable, and corporations must go on after managers," Nash said.

James K. Berthold, president and chairman of Sunnen Products Co. in Maplewood, got his own lesson in succession planning four years ago.

Company Chairman Robert M. Sunnen was killed in June 1990 when his light helicopter crashed.

Sunnen had named Berthold as president of Sunnen Products in 1987. With sales of $60 million a year and 600 employees, the private company makes machine tools. Berthold took over as chairman after Sunnen's death.

Robert Sunnen had given the succession plan much thought over the years, Berthold said. By making it "abundantly clear" prior to his death that Berthold was his heir apparent, the transition was much easier, Berthold said.

"A lot of individuals don't want to face up to that," Berthold said. "We all want to think we're immortal.

"And I think some might shy away from that subject because they might consider it a threat."

Some chief executives give little more than lip service to succession planning, others say.

"There is a conversation and dialogue, but they often don't take action," said Caroline Nahas, managing vice president at Korn/Ferry International in Los Angeles. …

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