Jun 23, 2009
Apple’s Silent Operations
The news that Apple’s Steve Jobs recently received a liver transplant once again begs the question – how important is disclosure?
Graphic courtesy of Harvinder Singh
Simply put, publicly traded businesses are required to disclose what the laws tell them to disclose. Ralph Norton of New York’s Davis & Gilbert LLP says there is nothing requiring the health status of a senior executive to be disclosed. “Absent a specific disclosure requirement, a company has the right to say nothing,” says Norton.
Securities Expert Gary Brown of Nashville-based Baker, Donelson, Bearman, Caldwell & Berkowitz PC says the analysis should begin with the company’s risk factor disclosure, a requirement of publicly traded companies in their regulatory filings. In the case of Apple, the company disclosed its reliance upon one or more key personnel in its 2008 10-K, with updates in its January 20o9 10-Q and April 10-Q, making specific references to its CEO, his medical leave of absence, and the fact that he “has been involved in major strategic decisions during his leave.”
“Given this disclosure, it would appear that Apple has concluded that Jobs’s health is appropriate for risk factor disclosure, and the only real issue is whether the current risk factor disclosure is sufficient or whether it is materially misleading,” says Brown. If, on the other hand, a company were to conclude that the health of an executive did not warrant risk factor disclosure, while there may be no legal duty to speak, if the company chooses to speak on the subject, it must do so “truthfully and without material misstatements or omissions.”
As public relations professionals, we counsel our clients and organizations every day to be forthcoming, transparent and open. Apple’s silent treatment may be legal, but that doesn’t make it smart in today’s market.
Susan – You know I 100 percent agree with you on this, as I wrote my blog post on the same topic last night! Steve Jobs has created a face for the Apple brand…and that face is his own. I’m all for an individual’s privacy, but not if it affects the health of the company. If he really wants privacy (and I can imagine he does; as sick as he is) then they need to create a clear succession plan and start putting other faces in front of the media. It’s always been important to be honest, but it’s even more important in today’s world to be transparent. NOTE FROM ADMINISTRATOR: See Gini’s blog at http://www.spinsucks.com.
I think this is a non issue. When Jobs had the liver transplant he was no longer CEO of Apple. He did the right thing to step down. I am not sure what we are asking of Jobs or Apple. At the time of the transplant, Jobs was not making decissions on behalf of stock holders. He has a right as a private citizen to keep his personal health issues private.
As a long time Apple shareholder and product user, I have a great deal of admiration and respect for Steve Jobs, but I have never been worried about the growth and stability of this company in his absence. He is not inventing all these products himself (nor is he a creative force behind all the great Pixar movies)–he has surrounded himself with talent just like any good CEO does. As long as these innovative staffers stay on the job, the absence of Jobs, whether it be medical leave or permanent retirement, does not worry me–nor do I feel cheated or lied to as a shareholder because news of his personal illness was not released. Now, if there were massive resignations within the Apple company among their top talent… THEN I would be worried!