Carlos Ghosn’s Arrest Emphasizes Key Man Risk

Barron’s quotes Karen Brenner, clinical professor of business at New York University Stern School of Business, in analyzing news that Carlos Ghosn, the chairman of Nissan Motor, was arrested in Tokyo for financial improprieties:

“boards have to be really alert, especially in good times.”

“It’s easy for a board to be alert when times are tough, but it’s very important for a board to maintain their vigilance when times are good,” she continues, adding that “sometimes boards can be deferential to an iconic CEO” such as Ghosn.

Brenner says she was caught off guard by the news, in part because she has used Ghosn’s tenure at Nissan as a positive case study in a class she teaches at Stern. She credits Ghosn with overseeing a “complex turnaround,” adding “he was a very strong iconic leader” who “achieved a great deal in a very difficult, complex environment” involving different cultures and countries.

Brenner says, is that “every company should have a succession plan, including an emergency succession plan.”

She adds: “A good CEO ideally leads in a way that companies can go on without them. The optimal CEO [has] institutionalized the way they are operating and doing business.”

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