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    'Health' of India Inc: The perils of looking just at the company topline

    Synopsis

    The scrutiny of the health of the CEO is yet to be seen amongst the Indian boards and investors. Health — even if of the top-most executive — is still a sensitive and personal issue and isn’t made into a big issue that can adversely impact the eternal optimism with which Indian businesses are run.

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    An adverse health condition of a CEO becomes a critical risk factor to the future tenability of the business.
    Kiran Kabtta Somvanshi

    Kiran Kabtta Somvanshi

    Dr. Kiran Somvanshi has been a part of the Economic Times Intelligence Group, the research wing of ET for over 15 years now. Telling insightful, data-backed stories is her forte either through analysis, opinion pieces or hosting podcasts. She actively comments on issues concerning ESG, Corporate Governance, Investor Protection, Public Health, Gender and Corporate Social Responsibility and tracks Pharmaceuticals and Consumer Goods sectors. Kiran has a PhD from TISS and is a qualified Company Secretary, Cost Accountant with a bachelor's degree in Law and Psychology. She is a Salzburg Global Fellow, Fulbright Humphrey Fellow as well as a Chevening Fellow. She has had short stints with the World Bank, UNDP and collaborated on research in the Brookings Institution. Twitter handle: @Kiran_ET

    Stock trader and investor poster boy Rakesh Jhunjhunwala’s death at 62 last Sunday came two days after the death of investment banker and former Deutsche Bank CEO Anshu Jain at 59. While Jhunjhunwala was suffering from multiple health issues, Jain died of duodenal cancer. On being diagnosed of the rare form of the disease, Jain had reportedly blamed Deutsche Bank, and the stress his job had caused for his illness.

    Jhunjhunwala and Jain are not exceptional cases. Last year, 44-yearold Vinay Agrawal, CEO of Angel Broking (later renamed Angel One), passed away fighting stomach cancer. In 2020, 46-years-old Rudratej Singh, president-CEO of BMW India, died of a cardiac arrest while working out on the treadmill. In 2018, Anant Bajaj, Bajaj Electricals managing director, also died of a heart attack at 41. All facts point to one thing: at a time when India’s average life expectancy is nearly 70 years, these CEOs have died young.

    It is not uncommon to see senior corporate executives succumbing to chronic disorders such as cardiac illnesses, diabetes or cancer. Executive health — closely related to workplace stress and individual lifestyles — is emerging as a key factor to watch out for a company’s stakeholders. Notwithstanding an effective board and an elaborate succession planning, untimely loss of a key management talent renders adiscernible loss to the company in terms of its strategic focus and execution.

    Incidentally, India is the diabetes capital of the world, and the country’s disease profile is steadily changing from acute ailments to chronic lifestyle disorders such as obesity, cardiovascular and diabetes. The majority of India’s rich have not been able to safeguard against these disorders by leading a healthier quality of life despite being able to afford it.

    Years ago, when attending a press conference of a leading pharma company, the appearance of the founder-CEO elicited a comment from a reporter, ‘While the company is prospering, so is the girth of its CEO.’ Those days, the health of executives and its impact on the sustainability of the business were still alien concepts to the Indian business landscape. Indulgent lifestyles, along with the demands and stress of managing business, have since become the cause of many lifestyle ailments, which, in some cases, have even turned fatal.

    In recent years, health has been getting some extra attention in the world of business. The last two years of the pandemic seem to have provided a litmus paper test for a body’s immunity and stamina levels. From a pot-bellied, middleaged, grey-haired executive, the popular image of an Indian CEO is steadily changing to someone who is physically active, exuding a healthy appearance, running marathons with employees, and regularly hitting the gym. While executive health and fitness is still not a formal criterion to base one’s investment decision, but pronounced ill health of a key managerial person does become a matter of concern, especially among the institutional investors.

    Globally, this shift happened much earlier. The issue of Steve Jobs’ terminal illness and its impact on Apple’s business performance has been well-documented. While companies in the US are expected to publicly disclose any health issue affecting a CEO, there is substantial discretion under law for directors to evaluate what information needs to be disclosed — and how. It is normal for the corporate board of directors in the US to seek the health clearance of their companies’ top executives making it pertinent for the CXOs to strive to remain fit and healthy.

    This kind of scrutiny of the health of the CEO is yet to be seen amongst the Indian boards and investors. Health — even if of the topmost executive — is still a sensitive and personal issue and isn’t made into a big issue that can adversely impact the eternal optimism with which Indian businesses are run.

    However, in the larger scheme of things, executive health forms an element of the broad corporate governance standards. It assumes importance similar to the ESG (environmental, social and governance) factors. An adverse health condition of a CEO becomes a critical risk factor to the future tenability of the business. It’s time the ‘girth of the CEO’ also becomes a key monitorable for the investing community, besides a company’s topline and bottomline.
    The Economic Times

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