Evaluating the Impact of the Boss! A Significant Argument for Key Person Disability

Posted Sat, Sep 22nd, 2012 By cribadia

September 2012 | Phone: 866.512.0444

Evaluating the Impact of the Boss! A Significant Argument for Key Person Disability.

In January of this year, Daniel Wolfenzon of Columbia University, Francisco Perez-Gonzalez or Stanford University, and Morten Bennedsen of INSEAD, published in depth research evaluating the impact a CEO Hospitalization has on an organization. Below is the abstract summary supported by 35 pages of research.

"We have four main findings.

First, CEOs have an economically and statistically significant effect on profitability, revenue, and investment outcomes. Firms whose CEOs are hospitalized underperform when their chief executives are sick but otherwise exhibit similar performance relative to other firms.

Second, we find robust CEO effects for relatively young and highly educated CEOs, and for CEOs in rapidly growing environments, setting where the value of CEOs actions are arguably highest.

Third, we show that CEOs are unique: the hospitalization of other senior executives does not have similar effects on performance.

Fourth, consistent with the idea that hospitalizations meaningfully affect CEO potential at firm level, we find that hospitalizations lead to significant increases in turnover probabilities. Overall, our findings demonstrate that CEOs are a key determinant of firm performance…"

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Wolfenzon, Perez-Gonzalez, and Bennedsen's research concludes: "…Finally, our results emphasize the importance of comprehensive CEO succession and contingency plans."

For a copy of "Evaluating the Impact of The Boss: Evidence from CEO Hospitalization Events," email sean.mcniff@exceptionalriskadvisors.com.

INSURANCE SOLUTION
Key Person Disability – Lump Sum Benefits Exceeding $100,000,000 per Insured

As Lloyd's of London Coverholders, we specialize in determining the value of human capital a CEO provides to an organization, and designing high limit disability plans to protect their value.

As a trusted advisor, it is your responsibility to recommend KEY PERSON DISABILITY insurance as a solution to the potential risk of unforeseen hospitalization to a CEO. Human capital assets create a foundation of success in which firms are build upon. Take a moment and think of your very best clients, and who remains exposed.

Here below is a short list of high level executives disabled at the peak of their careers:

Roger Deromedi		Severe viral infection
Michael Eisner		Emergency bypass surgery
Herbert Kelleher		Prostate Cancer
Jack Welch		Heart Attacks
Roberto C. Goizueta		Lung Cancer

Exceptional Risk Advisors, LLC | One International Blvd, Suite 625 | Mahwah, NJ 07495 | www.ExceptionalRiskAdvisors.com

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