Sumner Redstone's health has become a popular topic on Wall Street and at both Viacom and CBS, where he serves as executive chairman. A series of small strokes affected his ability to talk. The 92-year-old reportedly has been quiet during earnings calls and missed the annual shareholder meetings for both companies.
People who know him said that he dials into board meetings, talks to top management and watches financial news and sports on TV. Also spilled: He's taken, and passed, a number of mental competency tests, including one a month ago, according to the Wall Street Journal.
Private information like this doesn't appear from nowhere. Various legal experts told Fortune the release was likely preemptive on Redstone's side to calm shareholders and bolster the stock of both companies -- and his own wealth. A Redstone family trust owns 80% of National Amusements that, in turn, owns almost 80% of the voting rights of CBS and Viacom. In fact, share prices of both companies have been up since the Journal article.
Still, when it comes to older executives, there will always be some who question an executive's mental competency -- fairly or not. "I've seen it come up since the late 1970s," said Jeffrey Sonnenfeld, senior associate dean for leadership studies at the Yale School of Management and a frequent Fortune contributor.
"Many of these titans of industry have defined themselves through their body of work, which is nothing short of spectacular, and it's very hard to step aside, especially these people who have been very successful," said Irwin Kishner, a partner with the law firm Herrick, Feinstein.
Not the first time
Add dysfunctional family dynamics and things can get even stickier. Earlier this year, alienated heirs unsuccessfully tried to mount a legal challenge of the competency of Tom Benson, owner of the New Orleans Saints football and Pelicans basketball teams. A judge ruled Benson, 87, was fit after the eight-day trial, which included testimony from his wife, three psychiatrists, a Saints employee, heirs and others. The estranged relatives have appealed.
Donald Sterling, 81, wasn't so lucky in 2014. His estranged wife used doctors' declarations that Sterling was incompetent to keep him from blocking the sale of the Los Angeles Clippers basketball team to Microsoft former CEO Steve Ballmer. Sterling filed for divorce this summer.
Often family members, major investors, and other executives will use a professed worry about competency as a tool to advance their own interests. "They always act as if they have a real concern and they want to protect the business or the trust or other family members," said Mary Gillick, an attorney with the law firm Withers Bergman who has dealt with such situations. "[Sometimes] people are tired of waiting around for them to move on," she said. "I don't want to sound macabre or evil [but] they come out of the woodwork in this kind of a fight."
Mental competency a murky concept
Complicating the picture is the lack of uniform definitions for competency. "Competency is very specific to a particular skill," said Jason Osher, a core faculty member and neuropsychologist at graduate school of psychology William James College. For example, an older executive might be deemed competent to manage his or her own personal affairs and yet not be considered capable of the far more complex decisions necessary for running a business.
There is no single test that documents competency -- and usually several tests are required to gauge a person's fitness to manage the challenges of running a company. "You design a battery [of commercially-available tests] that fits the bill," said Dr. Sanam Hafeez, director of Comprehensive Consultation Psychological Services in New York City.
That means something far beyond the mini-mental state examination, or MMSE, used to test for cognitive problems and a common screening test for dementia. When it comes to determining whether a person is capable of running two Fortune 500 companies, being asked to spell "world" backwards or count backwards from 100 by sevens isn't quite enough.
"It is a very different level of capacity, being chairman of the board versus deciding that you're giving your house to your daughter or son," Gillick said. But ultimately the choice of tests and their interpretations are highly subjective. "You can get two very good experts to come out with different opinions if they do the test on a different day, at a different time of day, under different circumstances," she said.
Ageism at work?
Robert Sternberg, a professor of human development at Cornell, argues that mental competency tests typically show a decline in an older person's fluid cognitive ability, or "the ability to think flexibly, quickly, and in non-entrenched ways," but that is not a good predictor of executive success.
The three things that do count are the store of knowledge, practical abilities, and the wisdom of making decisions in a broader context. Not only do these last far longer than fluid ability, but they require time to grow and build. So replacing a 65-year-old or 70-year-old with, say, a 30-year-old can be a mistake.
"I find the whole idea of 'testing' senior executives to be ill-considered," said Howard Gardner, a professor of cognition and education at the Harvard Graduate School of Education. "What one wants to know is whether that person is doing his or her job properly, and that is best determined by those on the scene, whether it be colleagues at work or members of a board who see the executive on a regular basis."
According to Sonnenfeld, companies run a risk when they turn out experience from the top ranks just because of age. "The Second World War was without doubt a victory of retirees," Sonnenfeld said. "There wasn't a single young successful general. George Custer was in his 30s. Was that a great model?"
Expect the conflicts to only continue. According to the Spencer Stuart U.S. Board Index 2014, the median age of board directors has climbed from 60.5 years a decade ago to 63.1 in 2014. And still, as of last year 73% of all S&P 500 board had a mandatory retirement age for directors. Of those, 30% set it at 75 or older, 52% say 72, and three boards have pegged retirement at 80, while 11% of all boards did not set a mandatory retirement age for concern that they might lose members with "deep knowledge about company operations."