What happened next is not entirely clear. As Roy Smith, a former Goldman partner, tells the story, Levy had left a note in the top drawer of his desk in the office. It said if anything were to happen to him, the management committee should name John Whitehead and John Weinberg as co-senior partners, and so Goldman did that, Smith said.
Whitehead said he never saw the letter. He said both Weinberg, who died in 2006, and he knew they were next in line and proposed to the committee that they share the title equally.
"It was a very short period of people not knowing," Whitehead said.
Succession planning at most major U.S. companies has evolved considerably since then. When JPMorgan Chase & Co Chairman and Chief Executive Jamie Dimon announced this week that he had been diagnosed with throat cancer, the largest U.S. bank said its board already had plans for a full-range of scenarios in place.
Sudden, life-threatening ailments such as cancer present unique management challenges, which can throw a company into limbo and need more than the typical succession planning that boards do.
Companies must decide how much to tell investors while balancing disclosure with privacy of the CEO and his or her family. They have to accelerate their succession planning, while remembering that the person can fully recover and continue to do the job. They must ensure day-to-day management can continue smoothly, but also be prepared to deal with the situation if a crisis suddenly hits the company while its chief is out of commission.
Treatment for an ailment like throat cancer can be very debilitating, sometimes leaving the patient with mouth sores, and difficulty swallowing and speaking, according to doctors. There is often also residual damage from the radiation, which means recovery takes time.
"The real question is, how much distraction and energy and focus do you still have to keep running the company effectively?” Smith said. “If you're worried about whether you're going to die, the affairs of the bank become less interesting but to the shareholder they're as important as they were before."
It's a possibility that companies have to face frequently. Sitting CEOs at other companies such as Robert Benmosche at American International Group Inc and Warren Buffett at Berkshire Hathaway Inc have been diagnosed with cancer in the past.
In general, CEOs tend to be in an age group that is vulnerable to cancer. According to the National Cancer Institute, of all the people diagnosed with cancer in the United States from 2007 to 2011, 24.1 percent were between 55 and 64 years old and 25.4 percent were between 65 and 74. Dimon is 58.
While companies have made progress on managing through such situations, corporate governance experts said more is needed.
"What you're going to hear is, 'We have a deep bench. We have high-quality people. The board takes succession seriously,'" said David Larcker, professor at the Stanford Graduate School of Business, who has researched corporate governance and management incentives. "The issue is, How do you convince shareholders that you have a really good succession plan that's more than words?"
AIG faced a problem four years ago, when Benmosche was diagnosed with cancer. The insurer was struggling to recover and looking for ways to repay U.S. taxpayers for its massive bailout after it went nearly bankrupt in the financial crisis.
AIG Chairman Robert "Steve" Miller, who was only a few months into his chairmanship at the company at the time, said the first step was to "get it out there and be truthful." Further, AIG said at the time that if Benmosche were unable to serve for any reason, Miller would take over as interim CEO.
Miller had dealt with a similar situation before. In 2002, while he was running Bethlehem Steel, he was diagnosed with prostate cancer and underwent difficult treatment that left him unable to work for weeks. He delegated day-to-day management duties to senior executives while he sought treatment, and board committees stood ready to step in if a crisis presented itself.
Known for fixing and turning around companies, Miller said after Benmosche's diagnosis he started spending a lot more time at the AIG office, getting to know senior executives and getting up to speed on what they were working on.
"Besides the fact he got sick, he might also have decided, 'I am going to my vineyards. You guys take it from here,'" Miller said, referring to Benmosche’s villa and vineyards in Croatia.
Miller did not have to step into that role. Benmosche, he said, never slowed down, keeping a gruelling schedule while he was being treated. "I can't remember any period of 24 hours when Bob was not on the job and available," Miller said.
Benmosche did not respond to a request for comment.
The AIG board also set its succession plan in motion. Peter Hancock, who dealt with finance, risk and investments, was put in-charge of its property-casualty business, a key position running operations, to develop him as a potential candidate for CEO. He was named CEO of the company earlier this year and will take over from Benmosche in September.
JPMorgan hasn't said who would step in as interim CEO should things take a turn for the worse with Dimon. But Miller and other corporate governance experts said they expected someone like JPMorgan's lead director Lee Raymond, the former CEO of oil giant Exxon Mobil, could step in if needed.
The bank's spokesman said Raymond would not comment.
JPMorgan has gone further than AIG in the disclosure of Dimon's illness, telling investors and employees that his cancer is confined to the original site and to adjacent lymph nodes on the right side of his neck.
Benmosche never disclosed the type of cancer he was suffering from. But Miller said the directors met with the CEO's doctors to make sure they understood whether the cancer would affect his physical or mental capability to do the job.
Miller said the fact that JPMorgan described Dimon's cancer as curable, led him to believe it was more routine. Miller said Benmosche's ailment is treatable, but something that he has to live with.
Dimon plans to use his vacation time for at least half of his planned two-month course of radiation treatment and chemotherapy. He usually takes off about three weeks in August, traditionally one of the slower times of the year for business.
Miller said a company can function for several weeks if the CEO delegates responsibility. But the board must also plan for the "nightmare scenario": something like JPMorgan's massive London Whale derivative trading loss hitting the front pages while Dimon was not available.
"That's one where your lead director probably has to step in and speak for the company," Miller said.
(Additional reporting by David Henry and Luciana Lopez in New York; Editing by Martin Howell)
By Paritosh Bansal and Lauren Tara LaCapra