Jobs' Privacy vs. Investors' Right to Know

In an effort to calm Wall Street jitters, Apple CEO Steve Jobs last week announced his recent gaunt appearance was simply the result of a "hormone imbalance" that had caused his dramatic weight loss -- but a week later, his letter to Apple employees disclosed he had "a more complex" medical condition and would take a leave of absence until the end of June.

With Jobs so closely associated with Apple's creative vision and few other details forthcoming, the news clearly has unnerved investors. Apple stock fell seven points on the announcement of Jobs' medical leave of absence.

"The fear of the unknown has been escalated," said Gene Munster, an investment analyst with Piper Jaffray & Co. "The bottom line is that people thought that he was on a faster track to recovery and now it seems uncertain."

Because of it's impact, the mystery surrounding Jobs' condition may raise a broader question: How much does the public have a right to know about leaders of publicly traded companies -- especially one as closely associated in the public mind as Jobs is with Apple?

After all, besides being CEO of Apple, Jobs is widely seen a primary creative force behind the company. His product presentations are legendary and have helped make hits out of such consumer electronics as the iMac desktop computer, the iPod digital music player and the iPhone.

Financial lawyers say the information investors are entitled to versus the information they may want to hear are two different things.

The Securities and Exchange Commission doesn't have an established rule regarding a company's disclosure about a CEO's illness.

However, according to Gary Stern, a writer for Investors Business Daily, "There are several securities laws that stipulate a company must make material information available to the public that influences an investor's knowledge of a company."

Stern said that includes "any major changes to its highest officers or board of directors that could affect the company's revenue."

Until this week, Apple has been reluctant to discuss Jobs' health, saying it's his personal business.

Ethicist: 'He Gives Up Some of His Rights to Privacy'

Tim Bajarin, the chief analyst of Creative Strategies, acknowledged Jobs is a very private person. But the computer industry consultant added that Jobs is such an important person to the company "that you can't separate the private life from the public life."

Kirk Hanson, an ethicist at Santa Clara University, said Jobs is a unique CEO.

"His health affects the interest of so many other people," Hanson said, "that he gives up some of his right to privacy."

Munster believes Apple could have handled the whole situation differently and prevented some of the anxiety on Wall Street.

"If they would have said something earlier ... I think that people would have been more comfortable," Munster said. "The fact [that] they changed the story a little bit, or there's new information that came out, or call it what you want, has created this feeling of just uncertainty on what information investors are getting."

Hanson said because Wall Street will be keeping a close eye on Apple, he would recommend the company's board "over-communicates" about Jobs' condition.

"Given the suspicion that now looms over Apple and its board," Hanson said, "they need to communicate any and every relevant development in Steve Jobs' health over the next six months."

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