An important issue within the scope of corporate governance is whether a company should disclose the health problems of its CEO and how much information should be disclosed. The sensitivity of this issue is exemplified at Apple Inc., where CEO Steve Jobs faced numerous questions regarding his health and the impact that his sudden departure would have on the company.

In October 2003, Jobs was diagnosed with pancreatic cancer. No public announcement was made, although the board of directors was notified of his condition. The specific form of cancer was rare but considered treatable, with the majority of patients who undergo surgery experiencing a survival rate of more than 10 years. On July 31, 2004, Jobs entered Stanford Hospital for treatment. The following day, Jobs sent an email to Apple employees stating, "This weekend I underwent a successful surgery to remove a cancerous tumor from my pancreas. . . . I will be recuperating during the month of August, and expect to return to work in September.

While I'm out, I've asked Tim Cook [executive vice president of sales and operations] to be responsible for Apple's day-to-day operations, so we shouldn't miss a beat." A copy of the message was distributed to the Associated Press. It was the first public disclosure of his condition. Given Jobs's strategic and visionary role at Apple, it is perhaps not surprising that when trading resumed the next day, Apple stock fell 2.4 percent almost immediately. The issue of Jobs's health resurfaced in June 2008, when he appeared noticeably thin at a public appearance. A company spokeswoman responded to inquiries by stating that Jobs had "a common bug . . .

He's been on antibiotics and getting better day by day and didn't want to miss [the event]. That's all there is to it." When analysts asked for more information during an earnings conference call, Apple CFO Peter Oppenheimer declined to elaborate: "Steve loves Apple. He serves as the CEO at the pleasure of Apple's board and has no plans to leave Apple. Steve's health is a private matter." In January 2009, Apple released another letter from Jobs in which he explained that his recent weight loss was due to a "hormone imbalance." According to the letter, "The remedy for this nutritional problem is relatively simple and straightforward, and I've already begun treatment . . .

I will continue as Apple's CEO during my recovery." Concurrently, the board of directors issued a statement that "[Jobs] deserves our complete and unwavering support during his recuperation. He most certainly has that from Apple and its Board." However, the company announced 10 days later that Jobs would take another leave of absence. According to Jobs, "during the past week I have learned that my health-related issues are more complex than I originally thought. In order to take myself out of the limelight and focus on my health . . .

I have decided to take a medical leave of absence until the end of June." No elaboration was offered. Cook, then chief operating officer (COO), would resume leadership of the company. In the two-week period surrounding these announcements, Apple stock fell 17 percent. Jobs returned to work as scheduled six months later. Two weeks prior to his return, however, news leaked that Jobs had received a liver transplant at a Tennessee hospital the previous April.

A company spokeswoman declined to comment other than to say, "Steve continues to look forward to returning at the end of June, and there's nothing further to say." Doctors unaffiliated with the case explained that tumors associated with the pancreatic cancer that Jobs was originally diagnosed with often metastasize in another organ, commonly the liver. The hospital where Jobs received the transplant stated that his prognosis was "excellent." In January 2011, Jobs took a third leave of absence. In an email to employees, he explained that he would "continue as CEO and be involved in major strategic decisions" but that Cook would be responsible for "day-to-day operations." Jobs said he would be back with the company as soon as he could.

"In the meantime, my family and I would deeply appreciate respect for our privacy." When asked for additional comment, an Apple spokeswoman replied, "We've said all we're going to say." Jobs died on October 5 of that year, due to complications from pancreatic cancer that led to respiratory arrest.

Questions

1. Were the shareholders of Apple entitled to receive information about the health of Jobs? What about the general public? Of what value is such information? How might the company benefit from the disclosure of such information, and how might it suffer? How might the shareholders benefit, and how might they suffer?

2. From a corporate governance perspective, what issues are important in determining whether there should be disclosure of the health problems of a CEO? Is it an ethical matter?

3. Should information about the health of other senior managers, such as the five most highly compensated senior managers or the vice chair of the board of directors, be disclosed? Should other information be disclosed about the CEO of a public company, such as being involved in a contentious divorce that distracts from day-to-day management of the company?