What Do You Do When The Family CEO Suffers From Dementia?

Being the CEO means late nights at the family business -GETTY

An article in the Buffalo News by Lou Michel described the case of Aida Corey, her family and Permalink Products, a successful upstate New York manufacturer. It is well written and I strongly recommend you read it. In sum, Aida, who inherited the business from her husband, clearly was both suffering from some form of mental illness and was taken advantage of by non-family advisor who was in a position of influence.

           I will not try to summarize it all, but the case was exasperated by two law firms, one representing each side of the dispute, that took years and cost millions in legal fees (and more in lost value to the company). These costs and time have lead to bitter resentment of the lawyers by the family even though, from my reading, there is nothing unethical or illegal in the representation of the two sides during the dispute. This has less to do with the competency of the firm as it does with their failure to help resolve the family conflicts and resistance to change by the father, when he was CEO.  

           What, then, is an alternative way of representing the interests of both sides while resolving the conflicts and so avoiding this resentment? Here are six steps to resolving conflict:

1.   Articulate the Common Goal

2.   Define the Objective that is being blocked and preventing achievement of the common goal.

3.   Define the strategy deemed necessary to achieve the objective,

4.   Surface the underlying assumptions that the strategy is necessary to achieve the objective and validate them,

5.   Define the tactic, needs and wants that dictate the course of action that creates the changes needed to implement the strategy,

6.   Surface and validate the assumptions that this course of actions will create the needed changes to implement the strategy.

           The best solution is for the family to have, with professional help, a common goal, clear objectives and strategies for dealing with possible future scenarios – such as their mother’s dementia. Considering that their mother had a history of suffering from depression and anxiety before their father’s death, it is not an improbable scenario for their father that his wife would suffer further mental problems as a result of his death, and his professionals should have had a strategy for dealing with this possible and indeed probable, situation.          

           For example: 

·        having an Advisory Board that gains executive powers over the CEO at the death or incapacity of the father or the mother,

·        the removal of the mother from being the CEO at the father’s death (though still being a major share holder), or

·        A recapitalization of the company stock to bring in outside capital and take out the mother’s equity interest (also likely necessary to get the growth capital needed to make necessary acquisitions).  

           The result of such strategic planning by the family, and advised by their professionals, is that the Family always has a “Plan B” to deal with difficult situations, and understand the time and costs needed to implement that Plan B if something like mental illness does strike. Without those strategic options, the family is thrown back onto the tactics available through the courts that may be surprisingly costly and time consuming.

               So, the answer to the question in the title is that you deal with a family CEO suffering from dementia by implementing the Plan B that you have developed for just such a scenario.