A Refreshing Way of Handling a Very Serious Matter

It would not be surprising if long-time Apple (Nasdaq: AAPL  ) investors still feel burned by the way the company handled the health problems of founder and former CEO Steve Jobs.

Though the "risk factors" section of the company's annual report had noted that "the Company’s success depends largely on the continued service and availability of key personnel … including its CEO," Apple left investors largely in the dark when Jobs' health began to falter. A Huffington Post article from just after Jobs' passing highlights the extent to which investors' knowledge of Jobs' condition was informed mainly by rumor and speculation for years.

That's hardly the only way for a company to handle an executive's illness, and communications-equipment company Tellabs (Nasdaq: TLAB  ) is proving that right now. Back in April, CEO Rob Pullen, through a very frank letter to Tellabs investors and other stakeholders, revealed that he had been diagnosed with, and was undergoing treatment for, colon cancer. Pullen expressed optimism about his condition and concluded, "I’ll let you know if my health situation changes. I appreciate your understanding and support."

On Wednesday, investors did indeed get an update, by way of a letter from Tellabs chairman Michael Birck. He wrote that "Rob has been continuing treatment for cancer, and he recently had surgery. He remains in the hospital in stable condition and is under continuing care for his recovery." He also added that executive vice president Dan Kelly would be stepping in during Pullen's absence.

This isn't a totally unheard-of approach to keeping investors in the loop. Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  ) CEO Warren Buffett also announced in April that he had been diagnosed with cancer. He delivered a letter to shareholders, similarly promising to keep them up- to-date on his condition.

While the desire for privacy is certainly understandable, particularly when it comes to sensitive health matters, Pullen's openness about his health shows that he recognizes what's at stake for all of those involved with Tellabs – investors, for sure, but also customers, suppliers, and employees. This approach should certainly earn Pullen and Tellabs a gold star for transparency.

Always fans of strong and transparent corporate governance practices, we here at The Motley Fool applaud Tellabs and Rob Pullen for their handling of this difficult situation. Above all, though, we wish Rob a full and speedy recovery.

The Motley Fool owns shares of Berkshire Hathaway and Apple. Motley Fool newsletter services have recommended buying shares of Berkshire Hathaway and Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Matt Koppenheffer owns shares of Berkshire Hathaway, but does not have a financial interest in any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFoolor Facebook. The Fool’s disclosure policy prefers dividends over a sharp stick in the eye.


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  • Report this Comment On June 30, 2012, at 10:37 AM, oriorda wrote:

    Steve Jobs was consistent in his desire for privacy and everyone knew that. However, it didn't take a medical degree to figure his last illness was likely to be just that. The fact he never told us directly is, to my mind, a reflection of his view that it was a private matter, which I respected.

    I'd made my mind up that even if he survived it wasn't going to be as the Apple leader of old, and despite this, I had confidence he wouldn't leave his beloved company, and my shares along with it, in the lurch.

    Those of us who came along for the ride with Apple can never really thank Steve enough for what he did for us all by leading the rescue of a company we had loved for a decade or more for its approach to computing but which had lost its way for years in the hands of spreadsheet-centric execs. The value Steve led to being created in his come-back tenure is unprecedented and I for one have nothing to complain about.

    If he'd organized the company to be a one-man-band where everything was decided by him, then that would have been a different matter. His loss would have been terminal. But the man didn't do that. He spent a decade building a team to run the company, and his success is evidenced by what has transpired since his great loss. The company has prospered.

    In this age of celebrity, paparazzi and scoops it seems to be accepted that privacy is no longer something an individual can have. To an extent, when an individual makes his/her fortune from exposure to the public (movie folks for example) then perhaps the loss of privacy is the price they pay for the great wealth they get, but in the case of business leaders there's a balance to be struck.

    In Steve Jobs' case, I personally have no complaints about the balance he, and the company, chose.

  • Report this Comment On June 30, 2012, at 7:02 PM, TMFKopp wrote:

    @oriorda

    Thanks for reading and taking the time to comment. I appreciate your view, however, the one thing I will say is in response to this:

    "In this age of celebrity, paparazzi and scoops it seems to be accepted that privacy is no longer something an individual can have. To an extent, when an individual makes his/her fortune from exposure to the public (movie folks for example) then perhaps the loss of privacy is the price they pay for the great wealth they get, but in the case of business leaders there's a balance to be struck."

    The issue with Jobs is that he was a celebrity and a public figure, but he was also the head of a publicly-traded company. There were lots of investors that were depending on him to lead the company -- as the 10-K makes clear, he was *very* important to the company. His health, therefore, was not just a matter of idle gossip for US Weekly, but actually weighed on people's savings.

    Put in other terms, if Brad Pitt gets sick, there may be loads of avid fans that will rabidly try to figure out what's going on. But none of them have retirement savings riding on the outcome.

    Should Jobs/Apple have been more transparent? That debate will continue. But I imagine Tellabs investors very much appreciate the clear way that the company is dealing with Pullen's illness.

    Matt

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