When a CEO Coughs, Do Shareholders Catch a Cold?
Apple CEO Steve Jobs’ gaunt appearance at the Worldwide Developer’s Conference on Monday prompted a number of prominent bloggers, with understandable trepidation, to question his health. We wondered if a CEO’s health could be considered “material” — the sort of information the SEC requires a company to disclose to all shareholders equally. So we asked some lawyers. The consensus: it probably makes sense to disclose something that will affect a CEO’s performance, but there is probably no legal requirement to do so. Still, since shareholders file suit for the flimsiest of reasons sometimes it might make sense for a company with a potential health exposure to think hard about how to proceed. In 2003, when Jobs was diagnosed with pancreatic cancer, Apple kept it a secret until he had already undergone surgery. The Apple board decided Jobs’ right to privacy trumped an obligation to disclose the information to shareholders. Shareholders shrugged off his news, sending the stock down only 2.4