I got an email from a reporter the other day, which asked:
You may have seen news today that Amazon CEO Jeff Bezos had to be airlifted out of the Galapagos Islands after he had a kidney stone attack on vacation (a couple of links are below).I'm curious whether Amazon had a requirement to disclose Bezos's kidney stone attack, and if they now have an obligation to tell investors why Bezos had a kidney stone attack. (Amazon didn't disclose the airlift evacuation on its own; news outlets in Ecuador reported it.)
To which I replied:
There is very little clear law on this point and considerable disagreement among commentators. Some think that the requirement under Reg S-K Item 303 that the issue disclose "known ... uncertainties ... that the registrant reasonably expects will have a material ... unfavorable impact on net sales or revenues or incomes from continuing operations" would encompass material uncertainties arising out of a known health problem suffered by the CEO.
Other commentators, however, contend that there is no affirmative obligation to disclose CEO health issues (although obviously one cannot lie about them).
Part of the problem is the recognition that there are serious privacy issues at stake in this context. In a case that did not involve the securities laws, for example, the Third Circuit in United States v. Westinghouse Electric noted that “the right of an individual to control access to his or her medical history is not absolute.” In Citizens for Health v. Leavitt, the Third Circuit elaborated “that the right to medical privacy . . . is legally cognizable under the Due Process Clause of the Fifth Amendment, although . . . its ‘boundaries . . . have not been exhaustively delineated.”’ The Third Circuit concluded that “the question of the scope of the constitutional right to privacy in one's medical information is largely unresolved.”
This lack of clarity has made it difficult for the SEC to craft clear rules in this area. Enactment of HIPAA's medical privacy rules further complicated the problem.
For a good analysis, see See Tom C. W. Lin, Undressing theCEO: Disclosing Private, Material Matters of Public Company Executives, 11 U. Pa. J. Bus. L. 283 (2009)