Apple Names Ex-Northrop CEO Sugar to Board in Role of Audit Panel Chairman

Apple Inc. named former Northrop Grumman Corp. Chief Executive Officer Ron Sugar as a director, adding an aerospace-technology expert to a board that includes leaders in retail, cosmetics, software and politics.

Sugar, 62, will serve as the board’s audit and finance committee chairman, Cupertino, California-based Apple said today in a statement. Sugar headed Northrop, the third-largest U.S. military contractor, from 2003 until last year, helping the company consolidate $26 billion in acquisitions.

He fills a vacancy created by the March death of Jerome York, the former chief financial officer of Chrysler Corp. and International Business Machines Corp. Sugar led Northrop during a run-up in spending by the U.S. Defense Department and worked on digesting deals the company had made in the previous 10 years. He also holds a doctorate in engineering from the University of California, Los Angeles.

“Ron is an engineer at heart, who then became a very successful business leader,” Apple CEO Steve Jobs said in the statement. Sugar has been involved in the development of “some very sophisticated technology.”

Sugar joined Northrop in 2001 after the Los Angeles-based company bought Litton Industries. He became chairman and CEO in 2003, overseeing an almost 30 percent increase in sales. Northrop’s products include nuclear-powered aircraft carriers and unmanned Global Hawk spy planes.

‘Deep Understanding’

Sugar also built up the company’s information-technology business, which makes command-and-control systems for the U.S. military and systems for the health-care industry. The unit reached $8.54 billion in sales last year, or 24 percent of the company’s total revenue.

“Sugar presided over a rapid expansion of the company’s information services business, so he has a deep understanding of the technology and emerging market for such technology,” said Loren Thompson, a defense industry consultant and analyst at the Lexington Institute in Arlington, Virginia.

Apple fell $1.09 to $300.50 at 4 p.m. New York time in Nasdaq Stock Market trading. The stock has climbed 43 percent this year.

The diversity of Apple’s board mirrors its expansion into a range of markets. The company, now the world’s largest technology business by market value, has grown from a computer maker into a top producer of consumer electronics and phones. Apple’s iPhone and iPad sales accounted for more than half its revenue last quarter.

Seven Directors

The appointment expands the board to seven members, including Jobs, Intuit Inc. Chairman Bill Campbell, former U.S. Vice President Al Gore, Genentech Inc. Chairman Arthur Levinson, J Crew Group Inc. Chairman and CEO Mickey Drexler, and Avon Products Inc. Chairman and CEO Andrea Jung.

Sugar also serves on the boards of Northrop, Amgen Inc., Chevron Corp. and Air Lease Corp.

“I have always had enormous admiration for the people of Apple,” Sugar said in the statement. “It is a special privilege to serve on the board of such an amazing company.”

Corporate-governance advocates have complained that Jobs has too much sway over a group of hand-picked directors. The close-knit nature of the board may have affected the limited disclosures about Jobs’s health in 2009, when he had a liver transplant, Jeffrey Sonnenfeld, a dean at Yale University’s School of Management, said earlier this year.

Jung’s Rise

The company elevated Jung to co-lead director last December, alleviating some of those concerns by giving a more independent voice to the board, Sonnenfeld said. Levinson is the other co-lead director.

The audit and finance committee is in charge of overseeing the company’s financial statements provided to shareholders, as well as compliance with regulatory and public disclosure requirements. Sugar’s finance experience includes serving as chief financial officer at TRW Inc. in the 1990s. Other members of the panel include Campbell, Levinson and Jung.

The board stood behind Jobs in 2006 after the U.S. Securities and Exchange Commission began an investigation into stock-option backdating. Jobs admitted to recommending some favorable dates on options other than his own. A special board committee led by Gore exonerated him of misconduct.

To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net; Adam Satariano in San Francisco at asatariano1@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net; Tom Giles at tgiles5@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.