How companies benefit when CEOs walk on the wild side
Curtailing management's extreme actvities can kill their drive and creativity
THERE’S A LIGHTNING BOLT ON DANA Coffield’s climbing helmet. It’s not a logo, not the alpinist’s Nike Swoosh. For Gran Tierra Energy Inc.’s CEO, it’s a historical marker. It reminds him – as if he needed it – of the day in 2006 when he summited Mt. Birdwood in Kananaskis, Alberta and was rewarded with a lightning strike in the head.
From an e-mail he sent to a buddy afterwards: “It turns out I not only had a new hole in my head, I also had a new hole in my ass. Apparently when lightning goes into something, it must also come out. In this case it came out of my left buttock, leaving a 2nd degree burn the size of a pencil eraser (the headshot was a 3rd degree burn – a charred area the size of a loonie).”
Coffield was unconscious for 30 seconds. His partner re-oriented him and the pair spent the next five hours down-climbing, rappelling and mountain-biking to get him out. Gran Tierra, founded by Coffield, now 54, and six others, was barely a year old then.
Today, the oil company, with production in four South American countries, has 450 employees and a $1.2 billion market cap. What would have become of the company and the livelihoods of its employees (and the investments of shareholders) had that lightning bolt fried Coffield instead of singeing him?
CEOs like Coffield, who engage in high risk sports and adventure activities, pose a dilemma for their boards. Let them fly, or clip their wings? Last February, Idaho-based chip-maker Micron Technology, Inc. lost CEO Steve Appleton, an accomplished stunt pilot, when he crashed his experimental airplane in Idaho. The stock dipped for a few days, then climbed, but has been on a downward slide ever since.
Appleton is an extreme case of what can happen to a thrill-seeking CEO. However, boards must also recognize they risk something worse – killing a CEO’s drive and creative juice – if they shackle him or her to more earthbound activities.
Kym McNicholas, a California-based Emmy-award winning journalist who now writes for the tech website Pandodaily, used to produce a web segment for Forbes magazine called “Personal Best”. It examined the lives of dozens of audacious CEOs who did everything from hot-air ballooning to kite-skiing. “They are risk takers. That’s just part of their nature,” McNicholas says. “And so it’s no surprise that if they are risk takers in the boardroom, they are going to be risk takers outside the boardroom.”
Gran Tierra’s Coffield, in addition to being an alpinist who conquered Mt. Everest as well as other major summits in the Himalayas and the Andes, also ice and rock climbs. He’s been caught in two avalanches, and once, while roped, fell 60 feet off a wall, bouncing so close to the ground he twisted an ankle when it hit the earth. But Coffield says he has never had pushback from his board about his activities.
Maybe his board and co-founders know climbing makes Coffield better at coping with corporate risk. “Ironically, I find it relaxing, calming. Because of the concentration it requires, all the day-to-day worries and stress fall away and I just focus on what I’m doing. As a CEO I’m constantly taking calculated risks, making decisions based on calculated risks, which is the same thought process I use when I am climbing. So I do both for the intellectual stimulation of making important decisions, in a very calculated way without emotions and make the best decisions I can.”
Yet there are companies that do curtail CEO activities, and legally, boards do have the right to straightjacket their extreme CEOs, says Anne Kleffner, associate professor of risk management and insurance at the University of Calgary’s Haskayne School of Business. “As any other risk a company takes, the board has to decide its risk appetite, and whether or not those risks fall within it.”