executive succession

A sick CEO's full disclosure

October 7, 2010: 3:00 AM ET

When Hugh Martin learned he had cancer, he did the unimaginable.  He revealed everything.

Hugh Martin, CEO Pacific Biosciences

Everyone at Pacific Biosciences knew  something was up when CEO Hugh Martin called for an all-hands meeting on a Thursday. The company always held its big meetings on Friday, and it was rare that the staff didn't know the agenda in advance. So it was with some anticipation that all 300 employees of the fast-growing medical technology company squeezed into an auditorium at PacBio's offices on this day in January.

Martin, 56, could guess what the room was buzzing about. In Silicon Valley (PacBio is based in Menlo Park, Calif.) an unscheduled all-employee meeting usually means one thing: a merger announcement. "I know what you are all thinking," Martin told the crowd, with a dramatic pause. "We're getting bought. But that is not it. What I want to tell you is that I have a form of cancer called multiple myeloma, and before I continue, I want you to put down your iPhones and your BlackBerrys."

Then, in exquisite detail, Martin described his disease, how it was discovered, and what the future probably held for him and the company he was leading. "Don't grab for your wallets yet," he joked. "All that the investors care about is that I have at least five years left so they can get their return, and I can guarantee you I am not dying in five years." Employees were stunned, both by the shocking news and by their boss's candor.

When a CEO becomes seriously ill, a common impulse is to keep it a secret as long as possible without running afoul of public-disclosure laws. In the highest-profile recent instance of CEO illness -- Steve Jobs and what he called a hormonal imbalance -- the public and investors were kept guessing for months what Jobs' mysterious weight loss meant and why he was avoiding appearances.

Jobs' liver transplant in April 2009 was made public initially by the media -- not Apple. Keeping investors in the dark did not sit well with many people, including Apple board member Jerry York. According to an interview in the Wall Street Journal before his death this March, York said he was "disgusted" by the way Apple concealed the seriousness of Jobs' illness, and felt that it should have been disclosed much earlier. York confessed that he wished he had resigned from the Apple board over the matter, the Journal reported. An Apple (AAPL) spokesman declined to comment, adding that the company stands by the disclosures and statements it has made regarding Jobs' health.


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