Code Blue! We Need An Answer Stat! Do Shareholders and Media Have a right to know about a CEO’s Health?
01 August 2008
The recent hubbub about Steve Jobs and rumors of his health exposes a considerable chasm between what companies feel obliged to reveal, and what some investors and media believe is their right to know.
And given that the media have nothing better to do than to chatter about how Steve Jobs looks (never mind the growing recession, the crisis in the banking sector, collapsing financial markets, skyrocketing energy prices, collapsing housing prices and a war or two), there has been no shortage of chatter in the press and the blogosphere on the topic. The following are just some of the chatterboxes on the topic.
Given the average age of Fortune 500 CEOs, and knowing the stresses a CEO faces, I will venture a guess that there are any number of companies, and boards of directors, that are facing the question of how to address the health of the CEO.
So for communications managers, this is a fair issue to ponder, as all of us may have to deal with it at some point.
So here’s my POV.
If we assert – as we do – that a CEO represents an important element of an organization’s reputation (and, hence, perceived value in the marketplace), then it only follows that the condition and performance of that CEO will weigh heavily on the company’s reputation. This would suggest that the condition of a CEO’s health is fair game and companies should anticipate that investors and media will expect a degree of openness and substance from a company in this regard.
Does this mean that companies must feel obliged to include the results of the CEO’s annual check-up in their SEC filings, just as Presidential candidates are expected to disclose their medical records? Of course not.
However, it is a matter of political reality that we live in an age where transparency is seen as an obligation, not just something to be rewarded. That expectation of transparency extends to the public face of the company — the CEO.
This expectation is even greater when the CEO assumes a high public profile, such as Steve Jobs, Warren Buffett, Michael Dell, etc. And when the CEO chooses to become a blogger, he/she is further inviting the investing public, customers and the media to view him/her as an open book.
Claiming ”it’s a private matter” may be seen as antiquated and unsatisfactory as “we don’t comment on litigation,” and as self-incriminating as pleading the 5th Amendment.
As we are seeing with Apple, uncertainty about the CEO creates anxiety among investors, and the chatter simply compounds the anxiety.
So the situation presents some difficult questions for the company (or any company in a similar situation), and it suggests the need to address the ambiguity that exists as to a company’s obligations to disclose.
When is a CEO’s health the business of the investor?
Certainly, if any health issues impede the CEO’s ability to do his/her job, that would seem to be a matter warranting a company comment or announcement.
But what if the CEO is doing fine, but had prior problems with cancer, heart trouble or other such maladies. Should the company feel obliged to keep the public alerted every time the CEO sneezes, or has an MRI?
There are two angles to the Steve Jobs/Apple story that make this issue more complicated for the company. First, Jobs has spoken in the past about his bout with cancer. And it’s a truism that once a company or an executive starts to speak on a topic, they are expected to continue to speak. Second, the company made differing and ambiguous statements in response to questions about Jobs’ health. Perhaps the most troublesome is the separate statements from the company that Jobs’ health “is a private matter” and that he is simply suffering from “a common bug.”
Understanding that it is our inalienable right to read tea leaves, the former may be interpreted as an acknowledgement that Jobs does have a health issue, but it is no one’s business but his own. The second statement seems to imply that whatever Jobs is suffering from is no different than what all of us suffer from over time.
But is the “common bug” response potentially misleading?
Joe Nocera, in his column in Saturday’s Times, reports that Jobs called him and shared with him — on an off-the-record basis — information on his health. All Nocera reported was, “While his health problems amounted to a good deal more than ‘a common bug,’ they weren’t life-threatening and he doesn’t have a recurrence of cancer.“
Frankly, this is no less ambiguous than “a common bug.” But what I take away from this is that Jobs has some serious health issues, but nothing that will kill him. However, it doesn’t answer the question, “Does his health situation impede his ability to carry out his job?”
At the end of the day, perhaps that is the test that companies should apply.
(If, down the line, Jobs’ health takes a turn for the worse, and it is determined that it is somehow related to his existing condition, get ready for those shareholder lawsuits claiming the company mislead investors.)
In short, companies need to understand the landscape of the “CEO Health” question. Right now, Apple and Steve Jobs are garnering the attention. But the first company that chooses to be fully transparent on such an issue will set the benchmark for all other companies to emulate. And once a company chooses to be fully transparent, every other company that chooses to be less so ought to be prepared for the question, “Why aren’t you as forthcoming as the other company?