Do We Have to Disclose the CEO is Sick? 9 Things to Consider

Dealing with the decision over whether to disclose that your CEO is sick is one of the most challenging disclosure determinations you’ll have to make. It’s an area where the law is ambiguous – there haven’t been any SEC enforcement actions nor caselaw that solidly points you in a particular direction.

Back in my TheCorporateCounsel.net days, I blogged quite a few times about Steve Jobs before it became public knowledge that he was in bad health. There were rumors that he was ill based upon how he looked. The securities law issue arose – did Apple have an obligation to say something? Clearly, it’s something that the market wanted to know since he was so integral to the company’s performance.

And now unfortunately, the issue of a CEO’s health is increasingly in the news because of Covid-19. It’s a much more common occurrence that an important officer at a company falls deathly ill. A number of companies have disclosed in recent months that a CEO had the virus- then reported a recovery.

Here are 9 things to consider when deciding what to do in this area:

• No affirmative duty to disclose
• Compare the stock exchange’s standards
• The CEO’s right to privacy
• But there is a duty to update
• Risk factors about dependence on key managers
• CEO/CFO certifications when too sick to perform
• Determining just how sick a CEO is
• If you disclose, what do you disclose?
• Tell the board

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