Apple and Google: Faith and Heresy
True believers made the pilgrimage to Silicon Valley on May 10, as both Apple (AAPL) and Google (GOOG) held their annual meetings. The companies' fervent supporters turned out en masse. It took Google CEO Eric Schmidt a mere five seconds to get a round of applause as he opened his shareholder meeting—and all he had to do was mention the lunch Google had served.
Heretics were in the crowd too, however. Some shareholders have become sharply critical of Google and Apple for practices that have recently become public. Apple and its CEO, Steve Jobs, have come under fire for the timing of stock options awards, while Google and Schmidt have taken criticism for the company's policies regarding censorship in China. Never mind that both CEOs have annual base salaries of only $1 (see BusinessWeek.com, 5/10/07, "The Elite Circle of $1 CEOs").
The buzz among bloggers and others on the Web was over the rifts that surfaced at the annual meetings. One writer at Slashdot said that although there are plenty of examples of "technology companies like Google kowtowing to repressive politic regimes such as China's," the shareholder proposal raised at Google's annual meeting was particularly "interesting." Another writer responded with "so the 'Do No Evil' [Google's self-proclaimed guiding principle] actually lasted about 5 seconds into Google becoming" a publicly traded company.
Google Defeats China Proposal
The proposal came from the Comptroller of New York City, which controls almost 500,000 Google shares through pension funds for the city's policemen, firemen, and other municipal workers. Patrick Doherty, from the comptroller's office, spoke at the gathering and said Google's current policies in China make it complicit in that country's efforts to stop free speech on the Web. He called on the company to stop engaging in "proactive censorship" and to "use all legal means to resist censorship."
Google urged shareholders to vote against the proposal. David Drummond, Google's senior vice-president for corporate development, said that the company is "committed to free expression." He said the New York City proposal would force the company to shut down its Google.cn site, the search engine that operates in China, and that would result in less information being available in that country, instead of more. "Applying a rigid set of rules is not always going to get us the right outcome," he said. Moments later, the proposal was officially voted down.
But that certainly won't be the end of the issue. One writer at the Web site of the Berkman Center for Internet & Society at Harvard Law School said "businesses such as Google and Yahoo! (YHOO), despite their own initiatives, are going to be required to take action to deal with this issue." The person pointed out that there may be legislative or regulatory action on the issue in the future. "The question remains whether government, corporate shareholders, or the companies themselves will make the final decision on the terms of which freedom of expression and privacy are maintained online, around the world."
Apple: The Scandal That Won't Quit
Apple's shareholder meeting was a bit of a contrast. One man who spoke at Google said he attended both. He complained that the security at Apple was "worse than at the airport" and that his pocket knife had been confiscated at Apple's gathering. (He held it up at Google's in praise of the more relaxed security.) He declared himself "totally unimpressed" with Jobs, but happy with Schmidt's willingness to share his thoughts on strategy and initiatives.
The Apple faithful turned out in force, with some of the most extensive reporting from specialists like those at MacWorld. There were critics, too, however. Most of the sharpest attacks came from shareholders concerned about the options grants to Jobs and other executives, a compensation issue that has come under scrutiny in recent months. "The stock options backdating scandal that just won't go away" is how one writer described it at the Apple blog.
Jobs also faced an unwanted shareholder proposal. The Amalgamated Bank's LongView Collective Investment Fund joined with the Connecticut Retirement Plans & Trust Fund to propose much tighter restrictions on how Apple awards stock options to its top executives. Because the company said it had found "irregularities" in how its options were doled out in the past, the shareholders asked that the date of such awards be designated in advance for all future awards.
Plenty of bloggers weighed in in favor of the proposal. At MacUser, one person said the initiative seemed like a good idea "if not to curb any future hint of impropriety than [sic] at least for the positive image."
Apple, however, recommended that shareholders reject the initiative. The company said it was unnecessary because it hasn't granted options to senior executives for several years and because it would hamper the company's ability to attract and retain key people. Apple said the proposal had been voted down.
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