Replacing a CEO is never an easy task, especially if the outgoing chief is the company’s first-ever leader and reluctant to yield the spotlight to a successor.
This summer, board members of the internationally known, Durham-based Divers Alert Network are ushering out founding CEO Peter Bennett, who has sued the board of directors for control of the company and is now threatening to sue again if they refuse to denounce negative publicity about him on his way out the door.
He’s also elbowed his way into an ongoing role in an affiliated company, where he plans to continue wielding influence over the prestigious scuba diving safety and training nonprofit he nurtured from a tiny division of Duke University into a worldwide organization that sells insurance to divers and maintains the planet’s only 24-hour emergency hotline for dive injuries.
“Peter needs something to do,” says DAN board Chairman Bill Hamilton. “He’s suffering from severe withdrawal and founder’s syndrome.”
The date of Bennett’s last day at the helm of DAN was painfully negotiated. It came as the result of a lengthy and expensive court battle between the 23-year CEO and his bosses, who had urged him to retire amid concerns about his financial management and the direction he was steering the organization. Bennett launched the lawsuit to keep his job until 2005; a private settlement set his departure date for June 30, 2003.
Three days before he was due to surrender his lavish office at DAN’s suburban Durham headquarters last month, about 300 DAN members, staffers and supporters from around the globe congregated at the Washington-Duke Inn for a black-tie send-off on DAN’s nickel. By all accounts, it was a swell party. Longtime Bennett ally and former DAN corporate counsel Wes Covington, a Durham attorney, made light of all the controversy from the podium, and well-wishers toasted Bennett’s contributions to diving.
But even as the guests were landing at Raleigh-Durham airport earlier that day, Bennett was lobbying to hold onto some of his power.
“Peter has told me he is not going to go away quietly. Interpret that any way you like,” says Hamilton, a respected decompression scientist who joined the board earlier this year after helping mediate a settlement in the lawsuit.
Bennett did not return several phone calls.
After the private agreement ended the court battle last fall, and Bennett’s retirement was scheduled for this summer, several board members predicted that Bennett would seek to continue his involvement with DAN through its branches abroad. According to sources, Bennett spent his last week on the job doing just that, as well as making a frantic last-minute effort to erase the tarnish on his reputation caused by the lawsuit and its ensuing media coverage, primarily in The Independent (See “Deep Trouble,” Jan. 15, https://indyweek.com/durham/2003-01-15/index.html).
At a meeting of the International DAN board in Durham on June 26, Bennett pushed members to appoint him to an “emeritus” seat and give him a new job within I-DAN. I-DAN is a separate organization, with its own board made up of representatives from DAN organizations in Europe, Japan and Australia, as well as the parent American organization that Bennett has headed since 1980.
As the American rep to the I-DAN board, Hamilton quashed the idea of Bennett earning yet another salary from DAN’s coffers, since I-DAN relies on its American parent for a lot of its funding. As the CEO of DAN for more than two decades, Bennett earned three salaries–one from the nonprofit, one from Duke University, where he remains on the faculty, and a third from Accident and General Insurance, DAN’s for-profit subsidiary in the Cayman Islands. The undisclosed settlement of the lawsuit also affords Bennett a severance package some insiders refer to as “the platinum parachute.”
While Bennett was unsuccessful at lobbying his way to a new paying job, he did succeed in securing a non-voting seat on the I-DAN board, as a “chairman emeritus.”
His plan to erase the negative publicity is still under way. In the days leading up to his retirement, Bennett insisted that his bosses on the DAN America board sign a proclamation stating that he had never done anything wrong and specifically denouncing The Indy’s January article, which detailed the legal tussle that began when Bennett sued to keep his job.
Because private documents surfaced as court records, Bennett’s litigation made public a detailed story of internal strife and serious accusations of mismanagement at the $14 million company over the last two decades. In defending their decision to ask the CEO to retire, DAN board members accused Bennett of seeking personal gain for himself, Covington and other allies. The most serious of the accusations included testimony that Bennett and Covington, his hand-chosen corporate counsel, tried to secretly acquire control of DAN’s lucrative offshore insurance subsidiary in 1994–an accusation Bennett says is irrelevant since the deal wasn’t completed, and Covington denies. In interviews with The Indy, former employees and board members also painted a picture of a CEO who spent DAN funds freely on himself and his supporters, taking junkets such as Alaskan cruises and staying in five-star hotels when traveling on DAN business. The lawsuit also revealed that Bennett had never had either a formal employment contract or a performance evaluation, and there was no official partnership agreement with Duke University, which gave birth to DAN in 1980 and still plays a large role in its operations.
Under the settlement agreement, the board has expanded, and board members have hired a new corporate counsel and accountant. The contract with Duke is not yet finalized, but is in the works, says board member Bill Ziefle, a Raleigh attorney and the board treasurer.
“Things seem to finally be getting back on track, away from all the controversy and focusing on the things DAN needs to be focusing on–the mission, and growing the membership,” says Ziefle, who was one of the five defendants in Bennett’s litigation. Ziefle and other DAN leaders point out that DAN’s insurance business, which offers DAN members coverage for scuba-related accidents and injuries, continues to be profitable, and that the negative publicity generated by the lawsuit did not result in a huge drop-off in membership.
The next step is to hire DAN’s second CEO, a process that began in February and is tentatively scheduled to finish in mid-August. Also on the agenda for that board meeting are the two proclamations Bennett was demanding last month. One honors his contributions to DAN, and one exonerates him from any wrongdoing. The latter specifically protests The Indy’s investigation, which generated Internet chat among divers around the world and resulted in DAN’s mirror-glass building on U.S. 15-501 getting egged–twice.
“There are a lot of facts that are facts and can’t be cleared,” says Hamilton, the board chair. “But there are a lot of implications that he had committed wrongdoing, and it’s the implications that are so painful to Peter.”
Next month, Hamilton plans to ask his colleagues to simply endorse the letter to the editor he wrote rebutting the Jan. 15 article (See “Back Talk,” Feb. 5, https://indyweek.com/durham/2003-02-05/backtalk.html) and hopes that will be enough to mollify Bennett.
“Peter did a lot of things wrong, but he didn’t steal any money,” says Hamilton, who originally came under criticism from fellow board members for signing the letter as the DAN board chair without running it by them first. “We’ll have a majority, and we’ll pass this thing.”
But board member Dick Long, one of Bennett’s most vocal critics, says he won’t sign any document clearing the ousted CEO, and that he isn’t alone in that position. According to several board members, Bennett has stated plans to sue those who refuse.
“We are being threatened, and things are not going smoothly,” says Long, who runs a dive-equipment manufacturing company in San Diego and has served on the DAN board since 2001. “It’s unclear, at this point, how things are going to turn out.”
However complicated it may be to fill Bennett’s shoes, the new chief’s first job will be pretty simple: purchasing some furniture for the spacious fourth-floor office of the CEO. The previous occupant liked his so much he apparently bought it off the nonprofit and took it with him when he moved across the street to his new I-DAN office. 
