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Corporate Boards Find It Difficult To Limit Executives' Risk-Taking Hobbies


After a quick trip to the edge of space, Amazon's founder Jeff Bezos is back on Earth.


JEFF BEZOS: Control, Bezos - best day ever.


MARTINEZ: There were cheers but also sighs of relief from Amazon's board of directors. An unexpected injury or death of a top executive like Bezos could throw a company like Amazon into turmoil. But as NPR's David Gura reports, there isn't much they can do to rein in the risk-taking.

DAVID GURA, BYLINE: A few years before Mark Bertolini became the head of the health insurance company Aetna, he went skiing in Vermont.

MARK BERTOLINI: I was looking over my shoulder, checking on something, and I caught an edge and hit a tree and slipped headfirst 60 feet down into a river.

GURA: Bertolini was in a coma. He'd broken his spine in five places. And there's been a long, difficult recovery. But the insurance executive did not give up skiing. He's also someone who loves motorcycles. Bertolini owns three Harley Davidsons and a Ducati.

BERTOLINI: When I first was named CEO and chairman and was asked to look at a contract, they had skiing and motorcycling in there as exclusions. And I told them that that wouldn't work for me.

GURA: During those negotiations, Bertolini pushed back. And they relented.

BERTOLINI: I said that, you know, I would continue to be careful and take the appropriate precautions, but my life was my life, and I wasn't willing to give those up.

GURA: Many executives play golf and tennis, but some like to push the envelope. Going to space is something Jeff Bezos has wanted to do for years. Bloomberg TV interviewed him after the trip.


BEZOS: Honestly, I'm not talented enough to describe this in words. I can't figure it out. It was much more than I expected. It's awe-inspiring.

GURA: Richard Branson, the founder of the Virgin Group, has tried to circle the Earth in a hot air balloon, and about a week and a half ago, he went to space. Here's Branson on CNN.


RICHARD BRANSON: It was just, like, the most incredible dream. And just we're all just so lucky, so lucky, to be able to participate in it.

GURA: Company founders seem to feel especially empowered to do what they want to do. On the Fourth of July, Facebook's Mark Zuckerberg posted a video. It's him riding a hydrofoil surfboard, holding an American flag. Hillary Sale is a professor of law and management at Georgetown University, and she says risk-taking can lead to tension between a board and executives.

HILLARY SALE: At what point does their obligation to, in particular, a publicly traded company eclipse their sense of personal freedom? And at what point does the board need to speak to them about that?

GURA: A board is supposed to put a company's best interests first, and when a CEO does something dangerous, the board knows that also puts at risk investors and employees who depend on that business for their livelihood. In 2012, the CEO of Micron Technology died piloting a plane, and although the company named a new CEO days later, the stock didn't recover for about a year. Boards can make recommendations. They can take out extra insurance and add restrictions to contracts. But enforcement is uneven. Robert Lutz was a top executive at GM, Ford and Chrysler.

ROBERT LUTZ: I will tell you, I encountered these restrictions my whole career, never took them very seriously and got away with it for 47 years.

GURA: He also liked skiing and motorcycles. And Lutz owned and flew two fighter planes. When GM wanted Lutz back for another big job in 2001, this came up, and Lutz remembers what he told the board.

LUTZ: I'm happy to rejoin the company. I'm happy to assume the post as vice chairman. But I need absolute freedom as far as my hobbies are concerned.

GURA: Lutz says he got that absolute freedom. And he flew those jets until he was 87, by the way. He had to stop two years ago when he failed an eye exam. Lutz thinks more executives should be daredevils.

LUTZ: As opposed to, you know, calm, peaceful guys who never want to put themselves at risk, always drive at the speed limit, drive a minivan as their only vehicle and so forth - who the heck wants a person like that to lead a corporation or be in a leadership position at a corporation?

GURA: These days, Mark Bertolini is retired from Aetna, and he's still skiing and riding motorcycles. And he also believes leaders should take more risks. But now Bertolini sits on a handful of corporate boards. He's on the other side of the table. And that has given him a better appreciation for the challenges a board would face with a risk-taking CEO.

BERTOLINI: You never want to be in a place where that person is indispensable to the success of the company, nor do you want it, if it's publicly traded, to have a huge impact on market cap.

GURA: That's why CEO succession planning is so important. Bertolini says when he was running Aetna, he had a conversation about it at each and every board meeting.

David Gura, NPR News, New York.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.

Based in New York, David Gura is a correspondent on NPR's business desk. His stories are broadcast on NPR's newsmagazines, All Things Considered, Morning Edition and Weekend Edition, and he regularly guest hosts 1A, a co-production of NPR and WAMU.