If a CEO has a serious health problem, how and when should he/she inform the board? How should the board/company inform the shareholders? Dozens of boards are faced with these questions each year—often in crisis mode—and most boards find that they are underprepared.
In this episode, host TK Kerstetter and Doug Chia, Executive Director of The Conference Board Governance Center, discuss these difficult questions of disclosure and timing, particularly related to personal health.
If it can happen to another company, it can happen to you. [Look at] McDonald’s. They had two CEOs pass away in very quick succession. For other companies to say, ‘Well, that’s so unlikely and so remote, we’re not going to [prepare] for that’—I think that’s extremely short-sighted.
Kerstetter and Chia discuss the legal, regulatory, and professional obligations of the board and the CEO, and they highlight several companies who have handled these sensitive disclosures quite well. The two also discuss the similarities and differences between personal health situations and other sensitive disclosure topics such as a cyber breach, workplace accident, or quarterly earnings.
I understand the rules and protections that someone has [around personal health information], but if you’re the CEO, CFO, or the GC…you’re not supposed to put yourself ahead of the team. You’ve probably spent thousands or millions of dollars to create a culture [where] everybody works as a team. In those situations where something like [a health condition] can affect the team overall or the price of the stock…I think the right thing to do is disclose [to the board].