Though the Securities and Exchange Commission rules governing selective disclosure and insider trading contain no provisions relating specifically to the health of executives, publicly traded companies must nonetheless manage the potential implications of their key executives’ health on perceptions of the company’s future success as well as their propriety in disclosing information material to investors. This can be a difficult task, as an employer disclosing particulars about an employee’s health seems to run contrary to the special privacy protections given health information in the U.S., yet such information can undeniably affect investors’ decisions. Recently, the Securities and Exchange Commission launched a probe to evaluate statements made by Apple, Inc. regarding the health of CEO Steve Jobs. While not yet a formal investigation, this unprecedented evaluation of health-related disclosures raises significant issues about how such information should be treated and how the rights of investors are to be weighed against the rights of executives. Additionally, if this practice becomes regular, it could lead to unfair and burdensome erosions of executives’ rights to privacy and medical autonomy.
In 2003, Jobs was diagnosed with a rare form of pancreatic cancer that, unlike most forms of the disease, could be treated reliably and successfully with a surgical procedure. Against the recommendations of his doctors, Jobs initially tried to address his illness by adopting a special diet regimen. However, nine months after his diagnosis, he was forced to accept the prescribed treatment when a scan revealed that the tumor in his pancreas had grown. Apple broke the news about Jobs’ illness and surgery on the heels of the 2004 procedure, stating that he was “cured” and would resume his duties as CEO in a matter of months. The company’s stock value subsequently dropped 2.4%. In 2008, speculation about Jobs’ health again gathered momentum due to his increasingly thin appearance. Investor unease came to a head in October, when an erroneous item stating that Jobs had suffered a heart attack was posted on CNN.com’s iReport website. By the time Apple was able to rebut the report publicly its stock value had dropped 10%, demonstrating how closely investors associate Jobs’ leadership with Apple’s success. A December announcement that Jobs would not deliver his customary keynote presentation the following January at the annual Macworld Expo only served to exacerbate investor concerns.
On January 5th of 2009, coincidental with the start of the popular Macworld Expo event, Apple released a communication from Jobs stating that tests had confirmed what was causing his weight loss and that the remedy was “relatively simple and straightforward.” Nine days later, on January 14th, the company released another statement from Jobs, which explained that the CEO had decided to take a five month medical leave because he had recently learned that his...