The contrary surrounding the adequacy of disclosure from Apple Inc, with respect to the health issues surrounding its co-founder, Steve Jobs, has raised interesting issues about the extent to which corporate boards should go in terms of the disclosure with respect to any personal health issues which are experienced by senior executives.
Broadly speaking, I feel that health issues are the private concern of the individual executives concerned and that corporate board should refrain from public discussion of such matters unless such concerns have a direct impact upon the employment of the executive concerned.
The Steve Jobs Drama
The drama surrounding the health of Jobs unfolded as follows:
• In June 2008, Jobs appeared noticeably thinner at a public event. This sparked off public rumors about his health, particularly after he had battled with pancreatic cancer in 2004.
Despite increasing pressure, the board refused to comment on this matter due to privacy concerns.
• On January 05, Jobs made his first public comment on the issue, stating that his doctors believed they had found the cause – a hormone imbalance.
Jobs indicated that the treatment would be simple and straightforward, and that he would remain in his position throughout the recovery process.
• On January 14, Jobs issued further disclosure, indicating that his health issues were more serious than at first thought, and that for this reason, as well as the distraction arising out of public curiosity surrounding his health, he had decided to take a medical leave of absence.
• The company’s disclosure with respect to the above matter is currently the subject of an SEC Enquiry, to determine whether or not investors were provided with misleading information.
(Jobs is extremely well respected, and of course, I, like many others, sincerely hope for the sake of himself and his family that he is able to make a full recovery)
Two criticisms – one potentially valid
Broadly speaking, criticism of the company’s disclosure falls into two broad categories; (a) that the initial disclosure on Jan 05 was misleading; and (b) the general secrecy of the board regarding Jobs’ health overall.
With respect to the first point, investors may well have a valid complaint.
Directors have a responsibility to ensure that all public disclosures are accurate and are not misleading in any way. Accordingly, investors do have a right to ask questions about why the key messages contained in the two disclosures – just nine days apart – were so different.
It will be difficult to make informed comment on this until the completion of the enquiry, and it is genuinely possible that a clearer picture emerged during the time between the two disclosures about the nature of the illness.
Nevertheless, if the initial disclosure on January 05 does prove to be inaccurate, then this will represent a breach of ethical duty from the board with respect to their responsibilities relating to the accuracy of public disclosure.
When private health is private business
However, I cannot agree with broader criticisms about general non-disclosure with regards to Mr. Jobs’ health.
Apple is under fire for its continued refusal to reveal anything about his health during the months from the time when he began to noticeably appear thinner and the time of the first disclosure on January 05.
But there were two good reasons for the company’s silence with respect to this matter during that time:
• There was nothing definitive to report.
Based on Jobs’ statements, it appears to be clear that neither he, nor his doctors understood the cause behind the loss of weight. Until such time as this was properly determined, neither Jobs nor the board would have had any idea what impact, if any, his health issues would have upon his work in the long term.
• It was his private business.
The only time companies should make any form of public disclosure about the health issues of senior executives is when it becomes clear that the issue concerned has an impact upon the ability of the executive concerned to perform his or her duties going forward.
Beyond that, such issues are a private matter for the individual concerned, and any public disclosure or discussion on such matters from the company would represent an invasion of privacy and would be completely inappropriate.
In the case of Jobs, the company was correct in its refusal to discuss his health until it became clear that it would have an impact upon his position at the company.
Prior to that, his personal health issues were his concern and his concern only.
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