Apple Succession Plan: Nobody's Business?

Ask Apple (AAPL) about succession planning for CEO Steve Jobs and you'll quickly get the message: We have a plan, but we're not sharing it with you.

Now, Apple may need to start sharing more. News that Jobs will take a leave of absence because of health problems and turn day-to-day operations to Chief Operating Officer Tim Cook has renewed concerns that the company and its board haven't been forthcoming enough about plans for Jobs' permanent replacement. "When there is some sort of disruption at the company, it's the obligation of the board to let everybody know they are on top of it, and that everything is in good hands," says Nell Minow, co-founder of The Corporate Library, a corporate governance research firm.

Leadership experts say uncertainty over Jobs' health underscores the need for clear communication of a well-defined succession plan by Apple's star-studded board of directors, which includes Genentech (DNA) CEO Arthur Levinson and Google (GOOG) CEO Eric Schmidt. The board now ought to release a "better, clearer announcement" about Jobs' health situation, Minow says. Apple declined to comment for the story, and board members, all of whom were contacted by BusinessWeek, either didn't respond to requests for comment or declined to comment.

Not every company needs to go public with its planning, governance experts point out. But greater clarity may be essential in the case of Apple, a company whose image is so intricately tethered to a charismatic CEO who was sidelined in 2004 after treatment for a rare form of pancreatic cancer. Concerns over his health were heightened in recent months as Jobs appeared visibly emaciated during public presentations. In December, Apple said he wouldn't be making a keynote presentation at a January conference.

Complex condition

Jobs released a statement on Jan. 14 saying he would take a leave of absence until the end of June—though he would retain the CEO title—after learning "health-related issues are more complex than I originally thought." He added that his moves had the board's full backing. The remarks came just a week after Jobs said doctors determined the cause of his weight loss to be "a hormone imbalance" for which the remedy is "simple and straightforward." He added that even those remarks were more than he wanted to disclose about his health and that he didn't intend to revisit the issue publicly.

Until recently, Jobs and Apple considered the chief executive's health a private matter. As long as Jobs was able to carry out his duties as CEO, Apple didn't feel compelled to say much, if anything, about his condition. That has changed dramatically now that he's taking a leave, experts say.

An early step to greater disclosure, says Yale School of Management senior associate dean Jeffrey A. Sonnenfeld, is to get a medical expert to publicly explain the facts around Jobs' health. CEOs "do not have the luxury of privacy when it comes to their health," Minow contends. "Their shelf life is of crucial concern to the board and to the enterprise."