A Fiduciary Duty to Stay Alive?
After noting the record number of deaths on Mount Everest this climbing season, a recent article in The Wall Street Journal considers whether corporate leaders have a fiduciary responsibility to stay alive and examines the daredevil tendencies of top executives.
“For companies, trying to curb top executives who are prized for walking the knife edge between calculated risk and recklessness is a dilemma. Tell them to stop flying airplanes, racing cars, horse jumping, skydiving, smoking, running with bulls or bungee jumping and they could leave. Let them go along their merry way, and you might lose them another way.”
The article suggests that boards tend to understand that the very qualities that make a person a successful CEO also lead them to engage in risky hobbies. While efforts to restrain executives’ risky behavior are extremely rare and seldom enforced, the article describes one executive who went so far as to negotiate a condition of employment permitting him to “engage in absolutely any and all legal activities.”
What can a company do if its CEO likes to live dangerously? First and foremost, ensure that succession plans are in place and that appropriate disclosures are made. In addition, smaller companies often have key person life insurance policies. Bigger companies generally do not have these insurance policies, but they do fund security guards, drivers and private jets to help keep top executives safe. “Almost all of the 30 companies in the Dow Jones Industrial Average offer these perks, which cost an average of $425,000 a year.”