CEOs, Illness, And Stock Prices
The leave of absence for illness announced by Apple's Steve Jobs this week has raised questions about how much investors have a right to know when business leaders become ill or incapacitated. Senior Business correspondent Anthony Mason reports on the differing schools of thought on the issue.
When Hugh Martin, CEO of Pacific Biosciences, faced a health crisis last January, he called his employees together.
"I said 'you know, I have cancer of the blood. It's called multiple myeloma," said Martin.
Martin's Silicon Valley company was at a vulnerable moment. He'd raised $260 million to develop a DNA sequencing machine.
Was he worried that going public with your illness would risk the funding for his company?
"Absolutely," said Martin.
The 56-year-old CEO was afraid investors would abandon ship.
"My biggest nightmare is that I might pass away quickly. That the company would have serious problems, and all I'd worked for could all be at risk. And that was a very, very scary thought."
Martin chose to disclose everything. But frequently executives don't.
When Apple CEP Steve Jobs announced his third medical leave this week, Apple cited only unspecific health reasons. But legally that may be all they have to say
"The law says that the company has to tell you anything important - anything that might affect your understanding of the riskiness of the investment. It doesn't say that you need a complete medical report. So it's a little bit of a fuzzy area," said Nell Minow, with GovernanceMetrics International, a private agency that rates companies on their corporate transparency.
Sara Lee took a similar approach to Apple's. Last summer, when the company announced its CEO Brenda Barnes was taking a temporary medical leave, it at first it didn't mention that she'd had a stroke.
But corportate governance experts say Steve Jobs is special.
"He's not just the CEO, he's the company's brand and he's their most important asset," said Minow.
Jobs is the creative genius who gave us the iPod, the iPhone and the iPad.
"And he is what the investors and the employees and the customers are betting on. So yes, we are entitled to some candor," said Minow.
At Pacific Biosciences, Hugh Martin is glad he was candid. He's back on the job. There's still no cure for multiple myeloma. but the drugs are working.
He's says he's in remission now.
"There isn't even a trace."
In October, the company successfully went public -- proving that full disclosure doesn't have to be bad for business.
