Exploring Corporate Governance Around the World

By Allison Garrett, Senior Vice President for Academic Affairs at Oklahoma Christian University

Monday, July 31, 2006

CEO Health Disclosures

I've blogged previously (see my Ben Roethlisberger post) about CEO health disclosures. Now, there's a new story out about disclosures at Micron. It seems that the company significantly downplayed what may have been fairly serious injuries of CEO Steve Appleton when he crashed his stunt plane in 2004. See the story here. At the time, the company described Appleton's injuries as minor scrapes and bruises. This year, though, according to the story linked above, Appleton described his injuries as internal, head injuries, several broken bones and a ruptured disc.

The question I asked in my previous post was whether investors have a right to know about significant health issues. In this case, even if the injuries weren't all that significant, downplaying the injuries may have misled investors.

As is generally the case with antifraud rules, there is not always a duty to disclose. If, however, you decide to make disclosure about a certain topic, then the disclosure must be accurate and must not omit material information necessary to make the disclosure not misleading. In other words, if you're going to make some type of disclosure about executives' health, the disclosures must be accurate and complete enough that they are not misleading to investors.

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