Susan S. Muck, David A. Bell, and Michael S. Dicke are partners at Fenwick & West LLP. This post is based on a Fenwick memorandum by Ms. Muck, Mr. Bell, Mr. Dicke, and Alison Jordan.
The death of Oracle CEO Mark Hurd in October has highlighted a longstanding public company dilemma: whether and when to disclose the news that a senior leader has a serious health challenge.
Not only is the topic sensitive from a personal and privacy perspective, but there is no specific rule or duty that requires disclosure of a CEO’s or other executive’s adverse health information—unless the executive is incapacitated. [1] While commentators and news articles sometimes suggest companies should publicly disclose any serious health issue affecting a CEO, the law leaves substantial discretion for the board of directors to evaluate the specific facts, and allows for a non-disclosure approach when the CEO can continue to perform his or her key duties. This is partly because health falls into a category of information that has over time been treated differently from core business information for purposes of judging materiality—that is, information a reasonable investor would consider important—under the federal securities laws.