Apple Investors Pass Measure for Bigger Say in Board Vote
Apple Inc. investors, gathered today at an annual meeting, passed a measure that gives them more say over which directors get elected, while rejecting another that would push for more disclosure about executive succession plans.
The board proposal requires directors to be elected by a majority vote, rather than a plurality, and was backed by the California Public Employees’ Retirement System, the largest U.S. pension fund. Apple opposed both measures.
Support for the majority vote signals that Apple investors want a bigger role in choosing board members. Corporate- governance advocates have complained in the past that Chief Executive Officer Steve Jobs had too much sway over directors. The close-knit nature of the board may have resulted in the limited disclosures about Jobs’s health, Jeffrey Sonnenfeld, a dean at Yale University’s School of Management, said last year.
“We’re asking for an election, not a coronation of the board,” Anne Simpson, a senior portfolio manager at Calpers, said in a statement today. “An election where you can be voted in without a majority is unworthy of a great company like Apple.” Calpers owns 2.6 million Apple shares, according to the statement.
Under the executive succession proposal, the board would have been asked to disclose plans for replacing Jobs and explain how it’s nurturing the executive team under him. Jobs, who is currently on medical leave for the third time in the past seven years, didn’t attend the annual meeting.
All of Apple’s directors were re-elected at the meeting. Neither of the shareholder proposals had been expected to pass, Brian Marshall, an analyst at Gleacher & Co. in San Francisco, said before the meeting.
The majority-vote measure makes it harder to elect unopposed members to the board and means shareholders have more power to overrule the wishes of Apple management.
Apple argued that board members would risk losing their seats simply because too few shareholders cast votes.
“Shareholders deserve to know the company has a plan in place,” Jennifer O’Dell, assistant director of corporate affairs for the union, said before the vote. “We want to know that companies are considering these issues.”
Apple opposed that measure as well, saying that revealing secret plans would aid competitors and make it harder to retain executives. Apple said in a regulatory filing in January that it has a succession plan in place.
O’Dell said the union would push for the succession plan measure again next year.
Today’s meeting, held at Apple’s headquarters in Cupertino, California, was the first time the board was available for questioning since Jobs announced his leave of absence on Jan. 17, handing day-to-day operations to Chief Operating Officer Tim Cook.
The move generated a fresh wave of concern over Jobs’s health, following his cancer surgery in 2004 and a liver transplant in 2009. Jobs is credited with saving Apple from near-bankruptcy in 1997, transforming it into a consumer- electronics giant and spurring its valuation to the highest level of any technology company.
Cook, 50, took over daily management during Jobs’s previous two absences. Apple’s shares climbed 67 percent during Cook’s stint as acting chief in 2009, signaling that investors were content with his leadership.
Apple shareholder Kirk DeBernardi, of Brentwood, California, said a public succession plan isn’t necessary.
“They are secretive, but it doesn’t worry me,” he said at the meeting today. “Companies can have their own private plans.”
Jobs took the latest leave of absence after his health deteriorated from fighting a rare form of cancer and the effects of his liver transplant two years ago, a person with knowledge of the situation said in January. Jobs had been unable to keep on weight as he underwent treatment for his conditions, said the person, who requested anonymity because the matter is private.
The CEO vowed to remain “involved in major strategic decisions,” and he dined with Barack Obama last week during a meeting between the president and top technology executives.
Jobs, who turns 56 tomorrow, hasn’t said when he will return from medical leave.
After the voting was concluded, Apple executives answered questions from shareholders. When asked about the company’s plans for its $60 billion in cash and investments, Chief Financial Officer Peter Oppenheimer said the company had no plans to change its policy of saving it for “strategic opportunities,” without providing more specifics.
Oppenheimer said the company is close to completing a $1 billion data center in North Carolina that will be used to help power the iTunes digital-music store, the MobileMe storage service and other features.
Cook told investors the company is confident its product success would continue. He called sales of 40 million iPhones in 2010 “unbelievable by any measure,” and noted that Apple still has room for growth in personal computers, smartphones and tablets.
Other executives echoed Cook’s optimism. “All of our competitors are trying to design an iPhone, and I’m sure they’ll be trying to design an iPad,” said Phil Schiller, Apple’s senior vice president of worldwide product marketing.
On March 2, the company will hold an event in San Francisco where it may unveil a new version of the iPad. An Apple invitation sent to reporters today with the image of a corner of an iPad says, “Come see what 2011 will be the year of.”
Cook also defended the company’s efforts to ensure safe working conditions in its supply chain, saying Apple investigates suppliers to ensure they adhere to social responsibility standards.
The New York Times reported that workers of one of Apple’s suppliers in China are seeking compensation after being injured by a toxic chemical used to make glass screens of the iPhone.
Cook said the company pushes suppliers to change their policies. “I’m really proud of the changes we have forced,” he said.
Apple gained $4.01 to $342.62 at 4 p.m. New York time on the Nasdaq Stock Market. The shares have climbed 6.2 percent this year.