Former Fiat Chrysler CEO Sergio Marchionne, who died Wednesday at the age of 66, underwent treatment for a serious, unspecified illness for more than a year, a Swiss hospital revealed Thursday.
The sudden change in the executive’s health threw Fiat Chrysler and Ferrari into a frenzied search for new CEOs on Saturday. It’s reported that Marchionne hadn’t informed either automaker of his condition, with their boards of directors only finding out from Marchionne’s family on Friday after his condition rapidly deteriorated.
Though Italian media claims Marchionne suffered from a rare but aggressive form of cancer, the reason why the executive sought treatment at University Hospital Zurich remains, officially, a mystery. People close to the late auto industry titan told Bloomberg that the cancer story is false. While those sources didn’t go into detail, they did say the “proximate” cause of death was cardiac arrest following surgery.
Prior to the company’s Saturday statement — in which it announced Marchionne’s grave condition and Mike Manley’s appointment to CEO — Fiat Chrysler only mentioned Marchionne’s health on July 5th. On that day, FCA said the CEO underwent a shoulder operation that required a “short period of convalescence.”
In the wake of Marchionne’s death, both FCA and the Zurich hospital found themselves bombarded with questions. How much did FCA know? What, if anything, went wrong at the hospital? While the automaker answered media queries independently, the hospital issued a statement.
“Mr. Sergio Marchionne was a patient at USZ. Due to serious illness, he had been the recipient of recurring treatment for more than a year,” the hospital’s statement read. “Although all the options offered by cutting-edge medicine were utilized, Mr. Marchionne unfortunately passed away.”
Speaking to Reuters, an FCA spokesman claimed the company was in the dark about Marchionne’s illness.
“The company was made aware that Mr. Marchionne had undergone shoulder surgery and released a statement about this,” the spokesperson said.
“On Friday July 20, the Company was made aware with no detail by Mr. Marchionne’s family of the serious deterioration in Mr. Marchionne’s condition and that as a result he would be unable to return to work. The Company promptly took and announced the appropriate action the following day.”
Marchionne’s illness and death raises the question of when exactly an ailing CEO should inform the company and its shareholders of their condition. Of this question, there’s no clear answer.
[Image: Fiat Chrysler Automobiles]
“Marchionne’s illness and death raises the question of when exactly an ailing CEO should inform the company and its shareholders of their condition. Of this question, there’s no clear answer.”
I guess whenever we are willing to accept our own mortality in the face of a terminal illness, then I suppose we can tell the stockholders
As a publicly traded company this may raise a red flag or two.
I’m not so sure: Elon Musk hasn’t publicly stated that he is a pathological liar, and VW leadership hasn’t disclosed that they suffer from lack of any kind of spine.
I for one, give Sergio a high five. Why tell the board? Whey would have moved quickly to put him out to pasture. I am willing to wager that he weighed his options and decided to go out doing what he loved to do, work vs. sitting at home staring out the window chain smoking and bored waiting for the inevitable.
He may have had difficult accepting his reality. How could he tell the board if he himself could not accept that he was dying? Sounds like his family caved at the last moment and notified the board once Sergio slipped into a coma
I would imagine, as he was undergoing treatment, that he had hope that he would recover.
This! ^^^^^^^^^^^^
If he had not given up hope, and felt recovery was imminent, I applaud him for keeping his issues to himself. Who knows when the doctor’s finally told him death was imminent? I certainly wouldn’t want to alarm the company, family, and friends until I knew the truth…Even then those I told would be a select few…
@JohnTaurus: Agreed. I’m sure he hoped or expected to recover, and perhaps his medical team told him the same thing.
Denial to some people is a rather powerful demon to confront and many never conquer it. Death is inevitable and to experience a “good” death; a peaceful death; one must accept that immutable truth.
+1. A confrontation with your own mortality is a humbling experience, no matter what station in life you’ve come to occupy.
You may be a king or a lowly street sweeper, but sooner or later you gotta dance with the Reaper.
Yeah, and I hear he doesn’t foxtrot too well.
I’m surprised there isn’t a contractual stipulation that high ranking corporate officers keep boards abreast of serious health conditions. It might vary by country, for U.S. companies HIPPA may make that difficult without a waiver. Something like chemo would be hard to keep under wraps.
Even if there was a stipulation he notify the board, what were they going to do? Sue him?
Hard to sue someone when they’re dead, unless you have a lawyers specializing in sueance.
I wouldn’t expect most people to know about such matters, but you absolutely can be sued after death.
It’s just done in the context of Decedents’ Estates & Trusts, and creditors, judgment-creditors and those seeking judgments can pursue their claims against the estate of a deceased person within applicable time limits.
See my post below for add’l info.
This very may well be an issue for Marchionne’s estate assuming that which is being published about his active concealment of a serious medical condition was done within the framework of his employment as CEO of a publicly traded corporation with things such as fiduciary duties, a board of directors, shareholders, and such.
Many large corporations require senior executives to take part in regular health examinations, whose results are then released to the Board. Stipulated in their employment contract.
Marchionne was at least ‘different’ from many large corporate CEO’s. Not afraid to make decisions, and challenge others. Part of this probably stemmed from his ego.
FCA is incorporated in the Netherlands, with legal headquarters in London, de facto headquarters split between Turin Italy and Auburn Hills, and stock traded on both the the British FTSE and American NYSE. It almost seems designed to engender confusion over whose rules must be followed.
Add the fact that it’s a limited liability company with controlling interest held by the Agnelli family’s privately held holding company, Exor, and you have quite a maze to negotiate. Exor is run by Agnelli family heir John Elkann, who pretty much gave Marchionne a blank check, and Sergio could easily hide anything from anybody.
Chemo would have been hard to hide, but he could have also been treated for something like heart failure. I imagine in time we’ll find out more details.
A reputable orthopedic surgeon would not have operated on Marchionne given the terrible condition he was in. One month before his death he was so weak that he was almost unable to finish a presentation to a police force in Italy. Sergio was a chain smoker up to last year combined with his 24/7 intense work habits which obviously contributed to his serious cardiac condition.
The family reported that it was shoulder surgery. There’s a possibility it was something else, one of those measures the hospital said it took to treat his year-long “illness”. The truth may (or may not) come out eventually.
As DeadWeight mentions below, the estate business could be tricky, if FCA wanted to play hardball. Then a lot more would come out as lawyers get involved. My best guess is that John Elkann of Exor had such respect for Marchionne that he’d be inclined to settle with the family and keep it all confidential.
The latest I heard was Marchionne’s shoulder surgery was for an invasive cancer, and he suffered a stroke. A sudden stroke would explain FCA’s rushed executive shuffle last Saturday, and make any argument about advance notice irrelevant.
“Due to serious illness, he had been the recipient of recurring treatment for more than a year”
That could mean cancer or virtually any other life limiting disease like heart disease or pulmonary disease.
Even if it was an incurable cancer, he could have been told that with current treatment regimes i.e. chemotherapy, radiation therapy, and biologicals; he could have had 3 – 5 more years of life to live.
All we can do is speculate. We do not have exact details.
From a legal perspective, this is really tricky for his estate now, especially given that Marchionne was what’s known as a “key man” in corporate parlance.
The fact he had a serious illness, if true, and took what could only be described as active measures to conceal it from FCA’s BOD, could result in attempted claw back if things get nasty (FCA is publicly traded corporation with fiduciary duties owed to shareholders, and material developments or events needing to be disclosed on corporate disclosures).
These are all salient points. It all depends upon the employment contract. CEO contracts are, generally these days, very biased in favor of the CEO so I would expect that the employment contract had strong provisions on Sergio’s behalf that limited the liability of his estate except in extreme circumstances. If, as it seems, he was, up until very close to his passing, performing his duties adequately, then I doubt there would be any attempt to claw back anything he had already received, if for no other reason than to assure the markets that all is well.
FCA is publicly traded on US exchanges and must comply with all regulatory requirements as such, including filing of timely reports and material disclosures (there are a myriad of these).
Marchionne’s health is of a level that rises to the materially significant level.
A duty to disclose a serious adverse health condition, or worse yet, the intentional act of actively concealing it, for any period of time, let alone a year or longer, is not a requirement that a company that’s publicly traded can relieve a CEO from having to disclose in a timely manner, as there are fiduciary duties owed to the board of directors (they also have fiduciary duties) and shareholders.
There changers well and probably will be litigation re this, in the form of shareholder derivative suits, to other forms of litigation depending on who knew what and when, potentially roping in the Agnelli family, other executives, and te board itself.
DW, as a lawyer, I’d say there is nothing tricky for the estate here. FCA is not going to sue Marchionne’s estate for anything. At all.
Unless the Board or some other senior official knew of a serious illness that was not publicly disclosed, I doubt anyone really wants to get into suing the family of a dead person.
Steve Jobs, part II?
Swiss health-care is interesting, felt like something out of the 1960s when I was there. The saying I heard later was the Germans innovate but the Swiss perfect, sounds about right.
Shout outs to Dr. Rickenmann and Dr. Smith.
No surprise. FCA has been cagey about their business to avoid hostile takeovers for years. If Marchionne had a serious health problem, as seemed likely after his successors were appointed hastily, he would have avoided disclosing it for as long as possible.
Whether or not this violates agent-principal contracts or fiduciary responsibility is debatable since some people would have wanted him to conceal, while others who prefer takeover would have wanted him to announce.