AAPL Apple Inc

By Kristin Broughton 

Companies are thinking through how or even whether they would disclose potential Covid-19 infections of executives.

U.S. companies aren't required to tell investors if their executives test positive for the infection that comes from the novel coronavirus, but they may have a strong incentive to do so, securities lawyers say.

U.S. companies have wide discretion when it comes to disclosing medical information about top executives, lawyers said, and there is no legal requirement compelling companies to do so. Instead, companies are guided by the concept of materiality -- that is, whether a reasonable investor would find the information important in making an investment decision, lawyers said.

But how companies interpret that concept has varied, at times prompting backlash from investors.

Through late Friday, no major U.S. company had appeared to make a disclosure about an executive with Covid-19.

But BT Group PLC, one of Europe's largest telecommunications companies, disclosed Thursday that its chief executive, Philip Jansen, tested positive for the coronavirus. The diagnosis set off an internal effort to alert staff and prompted a wave of self-disclosures from executives at other telecom companies who recently had come in contact with Mr. Jansen.

While companies have leeway on executive medical disclosures, they often have a strong incentive to provide timely information, said David Martin, a securities lawyer at Covington & Burling LLP. Doing so prevents employees from leaking information and investors from raising questions about why a CEO is no longer appearing in public, he said.

"There's a practical issue: Does the company feel like it has to communicate with employees?" Mr. Martin said.

Symptoms from coronavirus infections are mild for most people and include a fever, cough or aches. The risk of severe symptoms or death are higher for older people or those with underlying medical conditions.

A Securities and Exchange Commission spokesperson declined to comment.

The way Apple Inc. handled disclosures about the health of Steve Jobs prompted backlash from investors, stirred debate about what boards should tell investors about ill leaders and CEO succession plans, and fueled a push for greater federal oversight.

Apple said in January 2011 that Mr. Jobs, its CEO and co-founder, would go on medical leave, providing little indication at the time about the severity of his sickness, though he had previously battled pancreatic cancer. He died nine months later.

Apple didn't immediately respond to a request for comment.

Health disclosure decisions tend to revolve around the severity of an illness and whether an executive can perform the job or will need to step aside temporarily.

This month, JPMorgan Chase & Co. disclosed that CEO James Dimon had undergone emergency heart surgery, saying that the bank's co-presidents, Gordon Smith and Daniel Pinto, would run the bank in his absence. Mr. Dimon has been released from the hospital and is recovering at home, the bank said Thursday.

"There has been no consistent practice on how this plays out," said Michael Hermsen, a partner focusing on securities law at Mayer Brown LLP. "So some companies have provided disclosures, and some have not until the CEO dies or otherwise has to step away from the company."

Mark Maurer contributed to this article.

Write to Kristin Broughton at kristin.broughton@wsj.com

(END) Dow Jones Newswires

March 13, 2020 20:18 ET (00:18 GMT)

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