Editor's note: This story was first published July 18, 2004, after Steve Appleton was injured when he crashed his plane in the desert near Boise.

•••

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?

The issue came home to Micron Technology in the past week when the man who holds the company's top three titles -- chairman, president and CEO -- smashed his small aircraft into the desert floor near Boise.

Steve Appleton survived, with only an overnight stay in the hospital and some stitches to his forehead, and -- 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.

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."

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. But a spokeswoman for the organization said that the issue hasn't been considered important enough to warrant much discussion by its members.

To plan or not to plan

Boise software firm Extended Systems didn't have a succession plan when its former president and CEO, Steve Simpson , resigned suddenly last summer.

The firm's chairman, Ray Smelek, said it was fortunate happenstance that the board of directors had a ready and experienced replacement to announce at the same time.

"I feel very fortunate we were able to execute a change so smoothly, " said Smelek, about new President and CEO Charles Jepson, who had been both a board member and executive of the company. "I think that rarely happens. It's something on a board's agenda, but one of those things you'll talk about next time."

Smelek said he doesn't believe there's considerable urgency to replace a CEO immediately, but he admitted it is helpful when the process moves quickly.

"I don't think shareholders think there needs to be an immediate transition, but you never know how much confidence customers might lose in a company without a leader, " he said.

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. "The board doesn't discuss those details publicly, but it was enacted. They knew they had to act quickly."

Riker said reassuring customers, vendors and shareholders that the firm had leadership stability and continuity was important.

"It prevented any kind of speculation or wild guessing or leaving a void where there were questions about who's in charge, " he said. "That's not healthy for a company." Those types of questions arose last spring when Kraft Inc. announced its CEO, Roger Deromedi , had been hospitalized but wouldn't say why. It wasn't until two weeks later that the firm disclosed that Deromedi was recovering from a viral infection and acute dehydration.

Kraft executives defended their stance, saying Deromedi's medical concerns deserved privacy.

Risky business

Micron's board is tolerant of Appleton's penchant for risky hobbies, said Parker. "Steve's hobby of flying airplanes is part of who he is, of his competitive and dynamic nature, " said Parker.

"It translates well into his job as CEO of a major semiconductor memory company and the challenges that come with that responsibility. The board understands this."

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, " said Bililies, who said he knows of few CEOs with such risky hobbies. "There's Larry Ellison of Oracle Corp. who does competitive sailing, which can be very dangerous."

While it's not typical that a company's board would question its chief executive's hobbies, Smelek said Appleton's recent crash might make it an issue.

"My guess is that board will ask the question -- should they be concerned, " said Smelek. "They certainly can bring it up. It's within their prerogative. I would imagine the cost of insurance (on Appleton) just went up dramatically."

T