Opinion: When the CEO is sick, honesty is the best policy

Shareholders are served much better when corporations communicate quickly, clearly, honestly and transparently

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How the Trump White House has handled the president’s bout of coronavirus should give pause to anyone who heads an organization, including directors of Canadian publicly traded companies.

Holding large events where many, if not most, attendees are not wearing masks or face shields, as the White House did in introducing Supreme Court nominee Amy Coney Barrett, was clearly reckless. The need for large events at all is questionable. Boards of directors should satisfy themselves that the corporations they govern follow public health guidelines. That President Trump and Vice-President Mike Pence were in close proximity to each other several times leading up to the president’s testing positive is another bad example not to copy. In most companies standard practice is for the CEO and his or her successor not to fly on the same aircraft.

When it comes to disclosing an issue related to a chief executive officer’s health, the president and his team have provided another textbook example of what not to do. Dr. Sean Conley, the president’s doctor, has been less than clear with the public. He had to walk back comments he made Saturday morning about when exactly the president tested positive for COVID-19. He also dodged questions about whether Trump had received supplemental oxygen. This lack of transparency erodes public trust and confidence.

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The U.S. president being medevacked to hospital is clearly a news event of a global scale. But a corporate chief executive officer becoming seriously ill is also a public event.

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On Jan. 19, 2017, the board of directors of Montreal-based and Toronto Stock Exchange-listed Aimia Inc. issued a news release announcing that Rupert Duchesne, its group CEO, was taking a four-month leave of absence for a medical condition. The board did not elaborate as to the precise nature of that condition, however. On May 10, 2017, Aimia announced that he was retiring. Again, that news release made no mention of his medical condition, which news outlets reported was actually chronic mercury poisoning. The following day Aimia announced that Air Canada would end its Aeroplan relationship with the company and would create its own loyalty program. That news put Aimia’s shares into free fall.

When it comes to disclosing a health issue there are better examples to follow. When I was at CN, Claude Mongeau, our CEO, faced a health challenge. We issued a news release, which included a link to a letter from Claude to our employees. We were transparent and very specific in announcing that he was to undergo surgery to remove a rare type of precancerous soft-tissue tumour located in the upper left part of his larynx. We also disclosed he would require six weeks of targeted radiation therapy to begin about a month after his surgery. He did return to work, but a few months later, we announced that he was stepping down as CEO, with Claude stating, “I was filled with joy returning at the helm earlier this year, but I gradually came to realize that it is difficult to fulfill such a demanding ?role given my new condition as a laryngectomee.”

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Other notable examples of robust disclosure include JPMorgan Chase, which in 2014 disclosed that CEO Jamie Dimon had throat cancer. In 2012, Berkshire Hathaway founder Warren Buffett revealed he was undergoing prostate cancer treatment. These disclosures from CN, JPMorgan Chase, and Berkshire Hathaway stand in stark contrast to how Apple under Steve Jobs handled what ultimately proved to be his fatal cancer: he took multiple leaves of absence but was less than forthcoming with the details of his illness.

Perhaps the most poignant example of transparency occurred just last month when Jeff Carney, president and CEO of IGM Financial and IG Wealth Management, announced he was retiring for health reasons. In an extremely brave statement, Carney said, “I have been diagnosed with the early stages of Alzheimer’s disease and while this is a tough decision to make, stepping aside at this time is the right move for both my family and the company.”

Like politicians, CEOs are public figures. With the benefits of the corner office come responsibilities. Especially during COVID-19, directors should ensure that their chief executive does not take unnecessary risks and that there is full compliance with public health directives. And while the CEO of a publicly traded company does have a right to personal privacy, shareholders are served much better when corporations communicate quickly, clearly, honestly and transparently. Of course, the same applies to politicians in their relationship with voters.

Paul Deegan is CEO of Deegan Public Strategies. He was a public affairs executive at BMO Financial Group and CN and served in the Clinton White House.

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