On Thursday, October 15, Oscar Munoz, the newly appointed CEO of United Continental Holdings Inc., suffered a heart attack. In the following three days, United issued one statement, reporting that Mr. Munoz was hospitalized, that the airline was operating normally, and that it would provide “further details as appropriate.” On October 19, United announced that its General Counsel would immediately take over the role of acting CEO and that it was too soon to know Munoz’s course of treatment and timing of recovery. The United incident raises questions about how much information boards should disclose to investors when a CEO falls seriously ill.
Balancing the executive’s right to privacy, the company’s disclosure obligations, and the need to thoughtfully consider interim or succession planning and investors’ interest in these types of matters can be challenging, particularly in cases where an executive’s long-term prognosis could vary significantly from day to day. Before Steve Jobs succumbed to pancreatic cancer in 2011, Apple Inc.’s board did not disclose the specific reasons why Mr. Jobs took two extended medical leaves. That nondisclosure prompted some corporate governance experts to push for a federal rule covering medical absences or impairments that could seriously affect a business. While SEC officials declined to promulgate such rules, boards must carefully consider transparency regarding executive illnesses as well as interim leadership plans in the event of an unexpected future absence.