Apple challenged by investors on Jobs succession planning
Wednesday, February 23, 2011; 9:47 AM
Feb. 23 (Bloomberg) -- Apple Inc.'s board faces a showdown with investor groups today over its succession plan for Chief Executive Officer Steve Jobs, who is on medical leave for the third time in the past seven years.
Under a resolution slated for a vote at Apple's shareholder meeting, the board would be asked to disclose plans for replacing Jobs and explain how it's nurturing the executive team under him. The proposal, backed by the Laborers' International Union of North America, is endorsed by the investor-advisory service Institutional Shareholder Services.
"Shareholders deserve to know the company has a plan in place," said Jennifer O'Dell, assistant director of corporate affairs for the union, which has about 500,000 members and $34 billion in assets under management. "We want to know that companies are considering these issues."
Apple opposes the measure, saying that revealing secret plans would aid competitors and make it harder to retain executives. And that argument is expected to carry the day, according to Brian Marshall, an analyst for Gleacher & Co. Still, today's meeting will be the first time Apple's board will be available for questioning since Jobs announced a leave of absence on Jan. 17. Chief Operating Officer Tim Cook has taken over the company's day-to-day operations since then.
The move has 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.
Katie Cotton, a spokeswoman for Cupertino, California-based Apple, declined to say if Jobs would be attending the meeting or whether the full board will be there.
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.
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.
"I love Apple so much and hope to be back as soon as I can," he said in a note released by Apple on Jan. 17. "In the meantime, my family and I would deeply appreciate respect for our privacy."
The laborers' union, whose members are mostly construction workers, started pushing for companies to disclose their succession policies two years ago, O'Dell said.
"Other companies are doing it," she said. Apple is "a leader in the industry, so they should be doing the same."
Apple said in a regulatory filing in January that it has a succession plan in place. The details are kept confidential because making them public would provide rivals with an unfair advantage and possibly rankle some executives.
Apple also is facing a shareholder proposal backed by the California Public Employees' Retirement System that would require a majority vote to elect candidates to the board, instead of a plurality. Apple said the plan would hinder its ability to keep members on its board. That one isn't likely to pass either, said Gleacher's Marshall, who works in San Francisco.
Apple's stock reached record levels last week, making it less likely for the succession proposal to pass, he said. The shares gained $3.82 to $342.43 at 9:37 a.m. New York time on the Nasdaq Stock Market. They have climbed 5 percent this year.
"If the stock wasn't making new highs, I would say it is possible," Marshall said. "Considering its performance, however, I think it is highly unlikely."