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A sobering but positive announcement

In the past two decades, high-profile CEO health disclosures have repeatedly shown their power to impact stakeholder trust and destroy billions of dollars of stakeholder value. Just see the case of Steve Jobs at Apple, where the stock dropped 10% in an hour following his statement on his health leave.

So when Accenture CEO Julie Sweet announced on Thursday in an internal email and Form 8-K that her breast cancer had come back, taken at face value it wasn’t exactly a positive statement.

But Julie went a step further. In her words, “the prognosis from my doctor is excellent; the cancer was caught early, and my condition is curable.” According to her note, she will complete treatment for a 12-16 week period, with a surgery scheduled for next week. We are glad to hear that Julie is on a positive track to recovery and that she is receiving treatment on her personal path to good health.

This raises the question, should CEOs disclose their health problems?

The answer is that it depends on the severity of the issue, the legal necessity of such a disclosure, and the CEO’s personal comfort with disclosure. Read on to learn more about each consideration.

The severity of the CEO health issue

CEOs are meant to be seen as pillars of strength, so it can be quite difficult to disclose a life-impacting health statement. CEOs should take stock of the severity of their health issue as they assess the impact it will have on their day-to-day responsibilties, and therefore the business.

If the health issue is big enough to significantly reduce a CEO’s responsibilities, then it may be time to consider such a disclosure. The CEO would do well to brief their leadership team in private and then make a tactful internal announcement to all employees, in partnership with their Office of the CEO, Board and internal communications team.

If the health issue doesn’t present a material impact on the CEO’s job, then a personal statement isn’t necessary. Most CEOs opt to share critical pieces of health information only with their trusted circle, which can include family and perhaps their executive coach, Chief of Staff and Executive Assistant.

8-K, 10-Q and 10-K legal obligations

While health issue severity is the first important consideration, legality comes second. Julie hints at the legal dimension in her note: “The Board has been briefed and is fully supportive.” In this small statement, Julie describes the past actions she and the Board have taken to fully discuss this matter, likely in conjunction with outside counsel.

For those that are new to public company disclosures, Form 8-K is a report that is filed with the Securities and Exchange Commission to disclose material events. The purpose is to inform shareholders of significant events between quarterly 10-Q reports and annual 10K reports - events that may ultimately impact their investments. Companies that fail to make material disclosures such as these can be considered in violation of the Securities Exchange Act of 1934.

That said, the SEC nor the courts have released a set of guidelines on how they define “material,” and so it is up to the Board to make the judgement on whether the issue is “material” and legally requires a disclosure. For more reading on the legal murkiness of this law, take a look at this Harvard Law School Forum on Corporate Governance article on Best Practices for Disclosing Executive Health Issues.

Examples of such announcements from public leaders have come from Steve Jobs of Apple, Jamie Dimon of JP Morgan, Lloyd Blankfein of Goldman Sachs, Warren Buffett of Berkshire Hathaway, and Mark Hurd of Oracle who have announced pancreatic, prostate, throat and lymphatic cancer, respectively, while Mark ultimately did not specify the exact health reason for his leave.

A personal decision

That said, not every company is a public company and therefore disclosure isn’t necessary for private companies. And even in the case of medium to severe medical issues, a CEO may make a personal decision not to disclose their health issues due to personal reasons. This brings us to the third and final consideration: the CEO’s personal predilection towards disclosure.

CEOs hold varying levels of comfort in disclosing such personal information and in many cases ultimately the decision is theirs regarding if and how much to reveal to their team. This is due to a number of cultural, familial, educational and other life factors that have influenced the way they think and operate as a leader. CEOs may opt to deliver a Full Disclosure, Partial Disclosure or Remain Silent.

Succession planning, up next

That’s it - we’ve covered the 3 considerations for CEO health disclosures. Next up for the CEO and board to tackle: Succession planning, to derisk future scenarios in which the CEO needs to step away fully from their job. It’s important that there are multiple contingency plans in place where leaders can step in on an interim basis or full time basis should the CEO need to relieve their duties. We’ll leave this topic for a future newsletter.

If you’re a CEO reading this newsletter and you’re concerned that your health might become an issue, make a plan to discuss these CEO health disclosure considerations with a trusted advisor, such as your executive coach, your Chief of Staff or your Executive Assistant.

And if you’re a Chief of Staff or Executive Assistant reading this newsletter, signal openness to discussing such matters with your leader in a tactful manner.

Do you know a CEO, Chief of Staff or Executive Assistant that could benefit from understanding CEO health disclosures? Share this newsletter with them.

In the meantime, posting Julie’s statement below in full:

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Thanks for reading! Stay tuned for next week’s edition.

Until next week,

Mackenzie

Mackenzie Lee | Founder & CEO
M: 650.283.4152 | E: [email protected]
New York City, NY
www.CedarChief.com

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