Key corporate executives such as JPMorgan Chase & Co. (NYSE:JPM)'s Jamie Dimon are not legally required to tell the public or shareholders if they have taken ill. But how one handles such market moving information can be critical.
Just ask legendary investor Warren Buffett, himself a key corporate executive who battled the issue. Two years ago Buffett disclosed he had prostate cancer and in 2012 Buffett sent details of his diagnosis and treatment in an open letter to shareholders.
Buffett discusses Dimon's illness
Last week, Buffett is congratulated Dimon for his forth rightfulness during a difficult time. “He handled it exactly right. He would, no question about it. He is a first-class guy, and I think the world of him,” Mr Buffett told the Financial Times on Wednesday last week. “It’s a material fact, so you get it out fast and you get it out accurately and if there is any material change – which there has not been in my case – then you get that out there subsequently.”
The report noted corporate governance experts believe rules around the disclosure of a key employee’s health are unclear, but that shareholders are increasingly expecting detailed and timely information. For his part, Dimon followed Buffett’s example set in 2012 when choosing his own path.
Dimon discloses cancer
On Tuesday, as much of the financial world had one eye on the US Belgium soccer game, Dimon was hard at work on a memo he was writing to staff – penned from the doctor’s office. In the memo, he told colleagues that he had been diagnosed with throat cancer and planned to continue being involved in running JPMorgan during his treatment over the next two months. “The prognosis from my doctors is excellent, the cancer was caught quickly, and my condition is curable,” the FT reported he wrote. “While the treatment will curtail my travel during this period, I have been advised that I will be able to continue to be actively involved in our business, and we will continue to run the company as normal. Our board has been fully briefed and is totally supportive.”
“JPMorgan hit the right note in its disclosure,” Gary Hewitt, the head of research at accounting and governance research firm GMI Ratings, told the New York Times. “It’s a difficult balance between the legitimate right to privacy on the part of the executive and the legitimate right to know when critical things might happen to an executive for shareholders.”
Dimon's health details
The memo was specific and even reviewed medical tests Dimon had undergone and the hospital where he would be treated. A person familiar with the events said that Mr Dimon told JPMorgan’s operating committee on Monday and had already called the lead board director, Lee Raymond, former chief executive and chairman of ExxonMobil (NYSE:XOM). “More information is always better,” one of JPMorgan's largest shareholders told the FT.