The health of a key executive can often have a big impact on the share value of a company. The head of Apple, Steve Jobs, announced that he will be taking medical leave of absence and won’t be running the company. Jobs is well-known, and the news caused a ripple of apprehension in the markets. At the same time a debate was raging in the US about the rights of Apple’s investors to information on the health status of its top manager or whether a succinct announcement about his taking a medical leave was sufficient.
In its “Voice of the Elite” survey, Czech Position asked Czech lawyers how they felt about medical disclosure. The vast majority of Czech lawyers — almost three-quarters — thought that investors did not have a right to know the details of the health status of “their” managers. This may have been due to the wording of the question and its use of the word “details.” ‘A statement on the health problems of managers and the limits they entail, including any possible long-term absence, should be enough.’
Many lawyers felt that managers have a right to privacy. “Generally they shouldn’t. I’m convinced that, even in today’s times, there should be a part of life that is solely private, of which it is nobody’s business — for instance belief, health, sexual persuasion or the reasons for preferring to wear checkered ties on striped shirts. Moreover, ongoing information on the health status of top managers could cause unfounded anxiety or hope, which could affect share prices,” one lawyer said.
Nonetheless, this lawyer continued to say some amount of information was required. “At the same time, however, it is true that a manager is, above all, the custodian of a company’s and its investors’ property. If a given manager’s health status affects their ability to manage the company and the investors’ assets, then they should at least give information about how long they will not be able to carry out the position and whether it is likely they will return to it.”
Another lawyer also had a negative response. “A statement on the health problems of managers and the limits they entail, including any possible long-term absence, should be enough. … The right of an employee to medical confidentiality is stronger than the right of a shareholder to be informed.”
The next lawyer saw a clash of two opposing rights. “Never. By that I mean never in detail. Two areas of law are at loggerheads here. The right to protection of privacy and the right of shareholders to information.The investment public has a right to know if the managers are mentally and physically fit to carry out their jobs.
Waning right to privacy
A broader view, though highly critical, is given by this negative reaction. “It is symptomatic of today’s society that there is a creeping tendency to expand the boundary of ‘public’ to the detriment of ‘private.’ Soon, thanks to the mad regulators that are currently getting their way, airplane passengers will be informed about the health status of the pilot and cabin crew. Woe to the captain with varicose veins and three times woe for the stewardess with an allergy to chocolate. School kids will not have mathematics lessons if their teacher has astigmatism. The only category of illness that it won’t be possible to give any disturbing information on is transmittable diseases,” this respondent said.
“I hope it is clear that I’m being sarcastic. Nonetheless, I have ever greater reason to be worried that this is the direction we’re taking. There is little law on this, in effect only the technical side of the regulations. The problem is that law is obsequiously and incomprehensibly limping along to catch up with a pseudo-morality. Excuse my political incorrectness, as today one can’t say ‘limping’ without consequences,” the respondent concluded. ‘There are not so many companies that are so dependent ... on one person, as in the case of Steve Jobs.’
Another lawyer is not sure: “I hesitate on this issue. It has yet to be clearly resolved in the US. It arose in connection with the worsening health of Steve Jobs and the drop in Apple’s share prices. The health status of a company’s CEO is a personal matter. For a listed company it can indeed be price-forming information, but from the standpoint of the two opposing interests, I would prefer to keep information on the health status confidential. There are not so many companies that are so dependent — this is perhaps a matter of perception — on one person, as in the case of Steve Jobs, so that a new rule should be made for them. For unlisted companies I’d simply rely on natural professional conduct. The manager concerned can openly and calmly resolve everything with the owner.”
One respondent who answered positively sees the difference between the situation in companies that went “out on a limb” with shares on the market and the others. “If it concerns the top managers of companies with shares acceptable for trading on a regulated market, the shareholders/investors should be informed, but only about the general health status, not in detail. However, only to the extent that this status can influence his/her competence. So, for example, limited movement of the limbs, though serious, should not be part of such information. In contrast a less serious disease, which may potentially require a longer period in hospital or a change in the working rhythm, should be a subject of information.”
One lawyer gave a “soft” positive reply. “Soft [support for disclosure] because to determine the level of information on the health status of top managers — if there is a legally set duty to provide it to investors — would be technically difficult. Likewise, the issue of the circle of such managers in our conditions would require separate discussion. Strictly limiting their numbers to the board members — only the supervisory board in the case of the German model — does not make a great deal of sense in Czech conditions. For investors, however, valuable brains and hands do not always sit on the board of a company. A company should announce a marked worsening in the health status that would mean the person involved is not able to carry out their duties for a longer period. It would not, however, have to go into the details of the illness and the treatment or the prognoses. In the event of a serious accident the procedure could be somewhat different.”
Similar to marriage
The following respondent has personal experience in the matter. In his opinion shareholders, or trading companies, should have a right to information on managers’ health. “When I was to become an associate in a well-known international law office, I had to undergo a medical exam to confirm I had no serious health problems. I saw it as a legitimate procedure. Persons entering any form of trade ‘wedding’ should have the same information on their partner as those entering into a normal marriage. The consequences of insufficient information could be similar in both cases.”