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Pryor Cashman partner Stephen M. Goodman was extensively interviewed by MacNewsWorld’s Erika Murphy for her June 30, 2009 article about Steve Jobs, entitled “Grumbling Over Transparency Intensifies as Jobs Returns to Apple.”

Goodman was asked about a company’s obligation, if any, to discuss the health situation of its key officers. He told MacNews World that “the difficulty is the fact that illness is a fact which is personal to the executive and is not always clearly material from the company's point of view.  The courts and the SEC have considered a fact to be ‘material’ if ‘there is a substantial likelihood that a reasonable investor would attach importance’ to that fact in making a decision whether to buy or sell a security. However, because the law does not explicitly require disclosure of executive illnesses, it is possible to argue – as Jobs has – that the company's disclosure obligations do not trump the individual executive's right to privacy regarding his healthcare information.”

Asked to provide examples, Goodman noted that:

• Steve Ross was CEO Of Time Warner when he died from prostate cancer in 1992, with no prior disclosure from the company as to the seriousness of his condition.
• Andrew Grove was CEO of Intel when he was diagnosed with prostate cancer in 1995; rather than being disclosed by the company, his condition was revealed in an article Grove wrote for Fortune in 1996.
• Berkshire Hathaway disclosed CEO Warren Buffett's surgery for benign polyps in his colon in 1997, along along with succession plans.
• McDonalds promptly disclosed CEO Charlie Bell's diagnosis of colorectal cancer in 2004.

Goodman stated that these examples provide a rough guide for companies faced with similar situations. “First, has the executive disclosed the facts to the company's board? Ross withheld the seriousness of his condition during a period when he brought about the ouster his co-CEO, N.J. Nicholas and engineered the succession of Gerald Levin. Then, if the information is disclosed, is it simply factually disclosed or is it 'spun'? Again, in Ross's case, the board was informed by Ross's doctor toward the end of his life that Ross would be able to participate 'at some level' in the company's business but not resume full-time employment. Yet the company's public position continued to be that Ross would soon be returning to work.”

According to Goodman, one conclusion could be that in the event an executive simply remained silent on the subject of illness and was able to continue full-time at work, it would be possible to claim that his or her health was a private matter. “However, since the board is charged with supervising management, if the executive's performance is impaired in any way, it would seem advisable to get the complete facts and determine whether those facts are 'material' from the company's point of view.”

To read the entire article from MacNewsWorld, please click here.