United CEO Oscar Munoz (United Airlines via AP, File)

Just 41 days after United Continental Holdings replaced its last CEO amid a federal corruption probe, the airline has had to make another change at the top, this time temporarily naming an acting chief executive after its new CEO, Oscar Munoz, suffered a heart attack last week. 

Monday evening, United's board said the company's general counsel, Brett J. Hart, would become acting chief executive, saying Munoz was on medical leave after being hospitalized last Thursday, confirming reports that he had experienced a heart attack. "At this time, it is too soon to know the course of treatment and timing of recovery," the company said in a statement Monday evening.

The naming of Hart as acting CEO comes just days before the company was to report its first earnings update under Munoz's leadership. And it's yet another challenge for a board of directors that already had its hands full: United's board has been dealing with a federal investigation into the airline's relationship with the former chairman of the Port Authority of New York and New Jersey, managing the transition to a new CEO after the prior one stepped down amid those investigations, and monitoring a turnaround to repair its relationship with customers and employees.

Add to that the challenge of handling the hospitalization of its brand new CEO, and United's board is faced with a particularly sensitive and complex set of circumstances to manage. "I can't think of a situation in recent memory when you had two things like this happen to CEOs within 40 days," said Mark Rogers, the chief executive of BoardProspects, an online community for directors. "There’s a lot happening in this company. It's a good lesson for crisis management." 

Before Monday evening's announcement, United had issued two statements about Munoz. On Friday, it shared that he had been admitted to the hospital the day before and that the company would "provide further details as appropriate." Then earlier Monday, it released a statement from the company's non-executive chairman that the board anticipated it would "conclude the corporate governance process necessitated" by Munoz's hospitalization, and expected to release more details later Monday or Tuesday

In the company's announcement Monday evening, it said Hart had been been responsible for broad areas of the company, including customer experience, corporate real estate, and government and regulatory affairs. In the statement, the company said the board "remains actively engaged in preparing for all potential outcomes regarding the company's leadership structure." 

There are not specific guidelines from the U.S. Securities and Exchange Commission about what companies should say about a CEO's illness. Yet both the SEC and the New York Stock Exchange do say companies should share anything that is "material," or that a reasonable investor would want to know, according to John Coffee, a professor at Columbia Law School who specializes in corporate governance and securities law.

There are numerous questions that boards grapple with when it comes to disclosures about a CEO's health—where the line of privacy should be drawn, what impact the CEO's prognosis could have on the stock, how quickly the company should share news and still respect the CEO's family. But according to corporate governance experts, the biggest question for United's board, as well as many others, had to be who would manage the company as the CEO recuperates.

After all, investors don't necessarily want an hour-by-hour update on a CEO's health. "What they really want to know is how is the board going to respond to this information," Coffee said. 

Some weren't surprised to see that the airline is taking some time to orchestrate its response. Munoz was the chief operating officer of railroad giant CSX and sat on United's board when he was named to the job. He hadn't risen through the company's ranks, being groomed to become CEO—and there wouldn't have been a succession plan for him in place after only about a month leading United.

Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, said it would be unreasonable to think United should have announced a plan any faster. "Who would have expected something like this? No one would have a succession plan together," Elson said. "[Munoz] was only 56 years old, he was not elderly."

While it may have been too soon for the board to have a plan in place, at least one of United's board members may have particular insight into how to manage this difficult scenario. Walter Isaacson, the CEO of the Aspen Institute, sits on the airline's board and wrote the biography of Steve Jobs—whose own battle with pancreatic cancer led to hard and controversial choices for Apple's board about when, and how much, to disclose.

This post has been updated from an earlier version to reflect United's announcement Monday evening. 

 

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