JPMorgan Chase Chairman and CEO Jamie Dimon on Tuesday told the company’s employees and shareholders that he’s been diagnosed with curable throat cancer and that his prognosis is excellent.
While Dimon’s diagnosis isn’t apparently life-threatening, it nonetheless prompted the question of who will succeed him at JPMorgan’s (JPM) helm. But his announcement raised an even broader question: just what is expected of CEOs when it comes to their health?
The U.S. President receives regular check-ups and discloses the results every few years. (At President Barack Obama’s last exam in June, doctors deemed him healthy since he “exercises daily, remains tobacco-free, and only drinks alcohol occasionally and in moderation.”) Is the same expected of business leaders, who are often indelibly linked to a company’s financial performance?
A JPMorgan spokesman told Coins2Day on Wednesday that the company has no requirement that Dimon receive regular check-ups. Though he gets regular exams anyway because, as a person close to Dimon told us, the JPMorgan CEO “focuses on his health, regularly playing tennis and running with his wife and kids.”
While that’s the case at JPMorgan, practices certainly vary from company to company, says Dennis Carey of Korn Ferry, who has led CEO recruitment and succession planning efforts for companies like 3M, AT&T, and Office Depot.
Companies are known to buy so-called “key person” insurance policies for their CEOs, which put a dollar amount on executives’ contributions to the company and protects against a financial hardship should they die. Before those policies are issued, a CEO is usually required to disclose any health risks, says Keith Martinsen, executive vice president at ABD Insurance and Financial Services. And, depending on the policy, a CEO might also be expected to get a physical every year or so, the hope being that any catastrophic illness would be caught early.
The JPMorgan spokesman said that the bank has no specific insurance policy on Dimon, though he may be covered by a group plan for the bank’s top employees.
Carey says he always advises his clients to include at least a stress test as part of their due diligence when hiring executives from the outside. “In some cases, companies are billing out tens of millions of dollars to buy out an executive [from a previous employer] only to find out that the exec has an illness,” Carey says. “It’s more prevalent in the Coins2Day 200 and less so as you go down into mid-market companies.”
While there is no overarching standard on how to handle an executive’s health, in general, boards of directors and CEOs are adhering to a more liberal interpretation of the Securities and Exchange Commission’s rule that requires companies to publicly disclose material information about a CEO (i.e. Anything that would influence an investor’s decision to buy or sell securities) in what Carey referred to as the “post-Jobs era.”
When Steve Jobs was diagnosed with cancer and received a liver transplant, Apple’s mishandling of his sickness became the standard of what not to do when a CEO falls ill. The company never fully informed investors about Job’s failing health, even as the Apple founder became noticeably thin and took leaves of absence. The SEC later investigated whether the company had misled investors.
Dimon’s announcement on Tuesday mirrors the approach Warren Buffett took when he was diagnosed with prostate cancer in 2012. Even though doctors had said it was “not remotely life-threatening or even debilitating in any meaningful way,” the Berkshire Hathaway chairman and CEO chose to announce his early-stage diagnosis in a letter to shareholders
“The Steve Jobs situation was the tour de force in terms of reminding boards to get out in front of this sort of stuff,” Carey says.
Additional reporting by Stephen Gandel.
