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U.S. boards face tough CEO health questions
(Martha Graybow is a Reuters columnist. The opinions expressed are her own)
By Martha Graybow
NEW YORK (Reuters) - Investor concern about the health of Apple Inc chief Steve Jobs is spurring questions about how far companies must go in telling shareholders about a top executive's medical condition.
There is typically no legal responsibility on the part of publicly traded companies to disclose an executive's health issues, legal and corporate governance experts say.
They say it is up to boards to decide how much to disclose, with some being much more forthcoming than others. In contrast, politicians are often pushed into making early disclosures about health problems.
"There is the law, but then there is the practical investor and public relations aspects," said Claudia Allen, an attorney at law firm Neal Gerber & Eisenberg who advises boards of directors. "Different companies have chosen to deal with these issues in different ways."
Apple has been dogged for the past six weeks about questions over the health of Jobs, considered a visionary CEO who has been a major influence on the maker of the iPod, iPhone and Macintosh computer. For many investors, the idea of Apple without Jobs at the helm is a major worry.
Jobs had successful surgery to treat pancreatic cancer four years ago, but he looked thin at a recent conference, when Apple said he was recovering from a "common bug."
The company was asked about Jobs' health in a conference call with analysts on Monday following quarterly results, though it did not provide much new information. Chief Financial Officer Peter Oppenheimer said Jobs served as CEO "at the pleasure of Apple's board and has no plans to leave Apple" though his health is "a private matter."
That is not likely to satisfy Apple watchers who are concerned about Jobs, said James Post, a professor at Boston University School of Management.
"That comment is guaranteed to sort of stimulate a lot of discussion and more speculation," he said.
He said there are no firm rules for boards when a CEO has a medical condition, but as a best practice, the more serious the matter, the sooner the company should step forward.
"The Apple board really feels two very distinct kinds of pressure in this case," he said. "The uniqueness of Steve Jobs, just who he is and his relationship to the company creates a special burden, and the kind of rumors that are circulating also create a burden."
Apple spokesman Steve Dowling said on Tuesday the company had no further statement beyond its CFO's comments.
Allen said companies are often hesitant to speak about such issues because they fear the information could be misinterpreted by investors. Also, "to the extent it was viewed as misleading, somebody could theoretically assert a claim potentially under the securities laws," she said.
The issue at Apple is weighing on some investors, such as Solaris Capital Management's Tim Ghriskey, who said he was considering adding to his $2 billion fund's small Apple stake on Tuesday but that he was concerned about talk of Jobs' health.
"The only thing that would hold me back are the rumors about Steve Jobs' health," he said.
CEO health issues have made headlines elsewhere recently. Last week, the CEO of the world's biggest gold producer, Barrick Gold Corp of Canada, stepped down as president and CEO after being on leave dealing with an unspecified but serious medical condition.
Governance experts say that such departures highlight the need for companies to have good succession plans in place, something they say boards of directors are often reluctant to deal with because they don't want to ruffle feathers with current CEOs.
At Apple, succession planning already has occurred, Dowling said. The only problem for investors is it isn't being disclosed.
"We have said in the past that the company does have a succession plan but it is confidential," he said.
(Additional reporting by Alexandria Sage and Peter Henderson in Los Angeles; editing by Phil Berlowitz)
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