My CEO Just Tested Positive, Now What?
A growing number of public figures, including CEOs, have tested positive for COVID-19. Since the duties and responsibilities of a CEO often include being the face of the company and meeting with other executives who are, in turn, the faces of their companies, the potential for exposure is obvious.
If your CEO (or another management executive) tests positive for COVID-19, there are a number of scenarios. These range from the executive being non- to mildly symptomatic and able to perform remote work to symptomatic and unable to perform remote work. In any scenario, your company should have an appropriate response prepared.
Before the need for a plan constitutes an emergency, (virtually) sit down with your management team in order to outline each specific scenario and map out the company’s contingency plan and response to each scenario, including the who, what and when: (1) determining who steps in to take over tasks in the event someone is unable to work; (2) the scope of their responsibilities, duties and powers; and (3) your company’s communication plan, with employees, shareholders and the public, in the event of each scenario.
In drafting your contingency plan, consider these elements:
- Voluntary self-quarantine
Your company is likely already reminding employees of the importance of not coming into the office if they are experiencing symptoms of COVID-19 or other sickness. C-suite employees like the CEO and management team are no exception. In fact, if the CEO fails to comply with the company’s policy, it may encourage other employees not to do so, with potentially dire consequences.
- Investigate the exposure risk and notify individuals pursuant to government guidelines
The company should immediately identify which personnel may have been exposed to COVID-19 through interactions with a co-worker who has tested positive for the virus. CDC-issued guidelines advise employers to inform employees of their possible exposure to COVID-19 through another employee, while still maintaining the confidentiality required by the Americans with Disabilities Act.
Further, consider whether the nature of the CEO’s position might warrant additional or distinct action. The board of directors may consider encouraging the CEO to send a communication voluntarily disclosing their positive test to employees. Further consideration should be given to the need to notify third parties with whom the CEO has come into contact, such as customers, and how such communications could be made while still respecting the CEO’s privacy concerns.
- Review executive employment agreements in drafting contingency plans
Many executive employment agreements contain a definition of “Disability” and address circumstances under which a Disability may impact an executive’s ability to do work for the company. If the CEO is unable to work, the definition of Disability and related terms of these agreements may become highly relevant. The company must be familiar with the terms of its executives’ agreements implicated by a disabling illness.
- Consider the need for or propriety of public communication
As a practical matter, absent any public- or shareholder-facing notice that your CEO has tested positive for COVID-19, the press may end up doing it for you. A public communication can provide opportunities to assure shareholders and dissipate panic. It can also do the opposite, and companies must be cautious not to provide misinformation. Public companies, in particular, should consider and seek counsel regarding public communications relating to an executive’s positive test for COVID-19.
- Consult legal counsel regarding any potential for a legal duty of disclosure
Companies — particularly publicly traded companies — should consult legal counsel to consider SEC rules (or those of other stock exchanges) in order to determine whether the company has a duty to disclose (or duty to update). Relatedly, the V&E Coronavirus: Preparation & Response site includes information regarding making SEC disclosures in the atmosphere of this pandemic.
Please visit our Coronavirus: Preparation & Response series for additional resources we hope will be helpful.
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.