So what—or should—happen during the 24-hour period that follows the sudden departure of a CEO? Ideally, it would be the responsibility of the board chair to convene the board and the rest of the leadership team, McNamara-Fenesy advised.

There should be a determination of who has the authority to make decisions, including internal and external communication, and particularly for the press. If a CEO is removed for purposes of mismanagement, the board should discuss how this will be addressed.

Depending on the plan in place, the new leadership could shift to the board chairperson, someone else on the board or the credit union's management team, McNamara-Fenesy said. However, the designated person may not yet be ready to assume an interim role given the circumstances.

“One of the key mistakes is not having anticipated something along these lines. Members and regulators may get a sense that a credit union is vulnerable,” she said. “There could be some scrambling. Other credit unions might see this as an opportunity to do a rushed merger.”

In the event of a sudden resignation, removal or death, it is imperative the chairman of the board and second in command on the executive team jump into immediate action, said Russell White, president of Pinnacle Solutions, a Charlotte, N.C.-based strategic planning firm. One first point of business is to craft a proper press release or statement, he said.

“Anytime there is a sudden change in top leadership, controlling the story is paramount and it works best when you can get in front of the information being released by the media,” White suggested.

The statement should include clear facts and carefully worded information to make sure the statement has a positive feel, White said. For instance, he suggested concluding with, “Although Ms. CEO is no longer with us, the credit union is strong and will continue without losing a step.”

White said obviously, if the position is vacated by a sudden death, the statement would be much softer and address the loss the credit union has experienced. Still, the management team should express the credit union's strength and how it will work hard to maintain exceptional member service in light of the circumstances.

The next point of business would be to address employee in person, White said. At a multi-branch credit union spread across a wide area, that may not be possible. In that case, a statement very similar to the press release might include a focus on stability, he explained.

“One of the biggest mistakes I see credit unions make after a loss of a CEO is to get emotional,” White said. “Regardless of love, or angst if the CEO was removed, the immediate focus needs to be on logically maintaining the positive direction of the credit union business, at least outwardly to employees, members and the general public.”

Unfortunately, the CEO's departure may bring out negativity within the ranks.

“I see credit unions suffer through determining who is now in charge,” White said. “It's either a wrestle for power or, on the opposite end of the spectrum, no one wants to step up.”

Even in such a jolting moment, a succession plan at least establishes seamlessly who would step in from the executive team on an interim basis, White said.

The shift could also become complicated based on the executive's compensation package, particularly if the CEO departure occurred before a retirement date, or if some type of fraud or other crime was committed, said Kevin Mahan, president and consultant actuary of CUBED/Mahan Actuaries, an executive benefits consultation firm in Pasadena, Calif. Having contingencies in place in the cases of an arrest, death or disability are a must, he said.

“Replacing the top guy can be very pricey. If you know who the next person is, say a CFO that was training to become the CEO, then you know what will happen,” Mahan said. “But unless you've identified him or her, you go to a search firm.”

Life insurance plans can also impact a credit union's income depending on whether the CEO left voluntarily or involuntarily, Mahan said. The scenario could be either a positive or negative effect on the bottom line.

“There should be no ambiguities,” Mahan warned.

White emphasized that emotions can be the death knell after an unexpected change in leadership.

“(Once) the emotion of the moment enters into the decision, a hardening of the attitudes can happen quickly, stalling the credit union from moving forward,” he said.