Nestle SA (NESN), the world’s largest food company, said Chairman Peter Brabeck-Letmathe has been diagnosed with a curable illness that will require periodic medical treatment over the next six months.
“This does not affect Mr. Brabeck-Letmathe’s ability to carry out his role as chairman of the board of directors and he will continue to fully exercise his duties during the treatment,” the company said late yesterday in a statement, without giving any further details.
In making the disclosure, Nestle becomes the latest company to confront a difficult topic: how much to share about the health of its executives. While investors have a right to know about something that could affect the wellbeing of the company, boards have to be careful about how they deliver the information, said Bill Ide, a lawyer and corporate-governance expert at McKenna Long & Aldridge LLP in Atlanta.
“You just have to use your judgment,” Ide said. “It’s clearly a board issue and the board clearly has to address it, but from that point on it’s sort of a balancing act -- being compassionate and human, but at the same time protecting the investors.”
In Brabeck-Letmathe’s case, the 69-year-old chairman informed the Nestle board of his illness earlier this week on the day of the company’s annual shareholder meeting. Robin Tickle, a spokesman for Vevey, Switzerland-based Nestle, declined to comment further.
Not Concerned
“From an investor point of view, we’re not overly concerned for now as it does not appear to be a very serious illness,” said Jon Cox, head of Swiss equities at Kepler Cheuvreux in Zurich. “I don’t think this will lead to him stepping down.”
Brabeck-Letmathe, who is scheduled to leave the board in 2017 after almost five decades at the company, was chief executive officer of the Nespresso maker from 1997 through 2008. While CEO, he made a series of acquisitions, including the $11.2 billion purchase of Ralston Purina Co., to diversify the business beyond food. Earlier this year, he helped oversee Nestle’s decision to sell part of its stake in cosmetics maker L’Oreal SA (OR), an investment it had held for 40 years.
As chairman, the Austrian national has also helped shape the company’s push into health care, a sector that promises faster growth and wider profit margins than the Swiss company’s main food business.
Galderma Deal
As part of the L’Oreal sale, Nestle made a $3.6 billion purchase in February of Galderma, a dermatology business that revives skin. Galderma will become part of a new division known as Nestle Skin Health SA, with a brand stable ranging from prescription drugs to over-the-counter soaps and sunscreens for skin, hair and nails.
Companies ranging from Apple Inc. to Berkshire Hathaway Inc. have faced their own health disclosures over the years, spurring debate over how much information boards are obligated to divulge.
At Google Inc., CEO Larry Page wrote a blog post last year about a health condition resulting in hoarse speech and labored breathing. The ailment, left vocal cord paralysis, limited his ability to speak on conference calls.
In the decade before his death, Apple CEO Steve Jobs took three leaves of absence. During that time, the company drew criticism for not providing enough of a window into his worsening health. Berkshire CEO Warren Buffett, meanwhile, disclosed to investors in 2012 that he had stage 1 prostate cancer, which was “not remotely life threatening.”
When someone is diagnosed with an illness, it often takes time to know how serious it is -- and whether it affects succession planning, said Ide at McKenna Long & Aldridge.
“I don’t think there’s any obligation of the board to rush out the door and disclose it immediately when they get the news,” he said.
Bloomberg
