Apple, shareholder joust over CEO succession plan proposal

Apple, shareholder joust over CEO succession plan proposal

Summary: Apple shareholders will vote on a proposal that would require the company to "disclose a written and detailed succession planning policy" in case CEO Steve Jobs becomes ill again. Apple said the proposal is micromanagement.

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Apple shareholders will vote on a proposal that would require the company to "disclose a written and detailed succession planning policy" in case CEO Steve Jobs becomes ill again.

The proposal, detailed in Apple's proxy statement, was made by the Central Laborers Pension Fund in Jacksonville, Ill. In early 2009, Jobs went on a medical leave for six months in early 2009 to have a liver transplant. During that time, chief operating officer Tim Cook filled in and Apple didn't miss a beat. Jobs is a pancreatic cancer survivor.

The details of "Proposal No. 5" go like this:

  • Apple's board will review the succession plan each year;
  • Develop criteria for the CEO position and a process to evaluate candidates;
  • Identify internal candidates;
  • Begin a "non-emergency CEO succession planning" process, three years before a transition;
  • Report the succession plan to shareholders each year.

Apple has urged shareholders to vote against the proposal. Apple argues that it already does some of the things the pension fund wants. Meanwhile, disclosing a succession plan would put Apple at a competitive disadvantage. Apple said:

Adopting Proposal No. 5 would give the Company’s competitors an unfair advantage. Proposal No. 5 would publicize the Company’s confidential objectives and plans. Giving competitors access to this information is not in the best interest of the Company or its shareholders.

Proposal No. 5 would also undermine the Company’s efforts to recruit and retain executives. The Board believes that the Company’s success depends on attracting and retaining a superior executive team, including the CEO. Proposal No. 5 requires a report identifying the candidates being considered for CEO, as well as the criteria used to evaluate each candidate. By publicly naming these potential successors, Proposal No. 5 invites competitors to recruit high-value executives away from Apple. Furthermore, executives who are not identified as potential successors may choose to voluntarily leave the Company. Proposal No. 5 attempts to micro-manage and constrain the actions of the Board...

It remains to be seen whether Proposal No. 5 gets anywhere. For starters, Apple has performed well so the succession plan isn't in the forefront---especially since Jobs is healthy again. In addition, Cook's on-the-job performance, which netted him more than $59 million during Apple's fiscal year, was strong enough to backburner the succession issue for many shareholders.

Among the other key points:

  • BlackRock is the largest shareholder of Apple with 5.5 percent of shares outstanding. Fidelity has 5 percent. Jobs is the third largest shareholder.
  • Jobs took an annual salary of $1.

Here's the compensation breakdown:

Related: Pondering Apple in a post-Jobs world

Topics: CXO, Apple, Banking, IT Employment

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25 comments
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  • Yeah, I'm sure Steve will get right on that.

    Sure, let's just tell the world who we think we may pick to be the next CEO, [b]no[/b] company would possibly try to poach those people.

    I can see a big investor trying to protect their investment, but some of these ideas are just self-defeating. This is [i]really[/i] about activist shareholders trying to exert some control of company operations. Of all the companies to try that at, Apple is one of the least likely to react favorably.

    If I was a union worker in Illinois I'd be a little concerned that my pension fund managers seem to lack any kind of clue about the real world.
    matthew_maurice
    • Knowing ballmer would take over didn't help MS

      The loss of Jobs would be massive. But succession plans should not be public.
      Richard Flude
      • I agree. Though it clearly indicates a troubled future for Apple

        @Richard Flude
        Discussions like that show Job's imense importance to Apple, even if he is more figurehead than visionary (as there is no evidence he is the ones comming up with product ideas)

        For the board to be worried about it at this point would tell me that on the day of his death, the stock price will drop dramaticlly, regardless of whether it is right or wrong.
        :|
        Tim Cook
      • The succession plan IS public

        It's Tim Cook. Jonathan Ives won't budge, Phil Schiller won't budge and Bertrand Serlet won't budge.

        These guys are running the world's best tech company. Where is there to go, Palm?
        mlindl
  • Cyberslammer...

    just because you are constantly under Steve Jobs desk, don't get your hopes up...you're not inline for succession.
    SonofaSailor
    • Talk about petty......

      @SonofaSailor
      Just saylng I've read some of your posts and I have to say Cyberslammer is a fan which explains his interest in all things Apple. Now based on your all to common posts related to many an Apple subject matter the real question is not Cyberslammers fandom which is obvious but rather since you so don't like Apple why are you drawn to Apple related articles and feel the need to share your anger (strange that it is) about all things Apple?

      Pagan jim
      James Quinn
      • RE: Apple, shareholder joust over CEO succession plan proposal

        @James Quinn Because that's what defines a troll.

        Next question.
        I12BPhil
      • Does that explain Cyberslammer2's interests in WP7 and MS?

        Just saylng I've read some of his posts and I have to say SonofaSailor is a fan which explains his interest in all things Microsoft. Now based on Cyberslammer2's all to common posts related to many a Microsoft subject matter the real question is not SonofaSailor's fandom which is obvious but rather since Cyberslammer2 doesn't like Microsoft why is he drawn to Microsoft related articles and feel the need to share his anger (strange that it is) about all things Microsoft?

        See, it works both ways. Do I need to link you to all of cyberslammer2's post in the WP7 blogs, the Kinect blogs, the Surface blogs, ect?

        Just saying.
        AllKnowingAllSeeing
      • This is an Apple not MS related article....

        @AllKnowingAllSeeing
        So sure if Cyberslammer is posting negative things on MS related articles I'm with ya. However my point is that I often see Son on Apple related articles always posting in the negative and since you and I agree he/she is a MS fan what is up with that!?!

        Pagan jim
        James Quinn
      • RE: Apple, shareholder joust over CEO succession plan proposal

        @James Quinn Last time I heard this is a free and open forum. Totally unrelated to iNazi Germany and iCrApple's dictatorial fans. But a question for you Quinn; Why are you always one of the iCrApple morons posting hateful negative junk on Google, Adobe, MS, Linux and Android related stories??? ahaha.... I guess for you that's OK. But obviously it works both ways!!! ;)
        i2fun@...
    • RE: Apple, shareholder joust over CEO succession plan proposal

      @SonofaSailor

      If this had been said in response to one of Cyberslammer's typically obnoxious comments I would say it was fair, but as it this comment was completely gratuituous and therefore rude.
      Doctor Demento
      • I take it you haven't seen his avatar lately...

        @Doctor Demento, Pagan, AllKnowing (lol...Man, Devil, God)

        he's been calling me out on several 1st level posts...hence my post above
        SonofaSailor
  • One wonders what Apple will be like without Jobs

    Any successor to Jobs has very large shoes to fill, in terms of both visionary and practical matters.

    Apple is successful because the decision makers and designers are on the same page and because the company has a unified vision that it is driving in all their product lines. I assume that philosophy is what must endure beyond the fortunes of any one CEO.

    The kind of CEO that will kill Apple will be one that: Sees Apple's success as a means to an end and assumes that anything they do will be successful because they are already successful (Ballmer), Tries to force Apple back into the standard business model of it's contemporaries(Amelio), or another "Visionary" who sees himself as the next Jobs but whose vision is at odds with what has made Apple successful(Yoko Ono.)

    The consumer must also have confidence in Apple as a brand beyond the mythos of Jobs. Any way you look at it, it will be an interesting transition.
    Tigertank
    • Apple is successful for one reason only

      @Tigertank
      Marketing. Don't get me wrong, my MBP and iPhone are great devices but OS X is awful, iTunes is terrible, iPads are useless, AppleTV is laughable, etc.

      Apple's level of success of is from their marketing. It makes their good products sell better than anything ever invented and it makes their bad products sell better than most companies' top of the line stuff.
      NonZealot
      • It must pain you so much to see Apple's success.

        @NonZealot

        If I thought that you actually believed that NZ, then I would dismiss it as a shallow and lazy interpretation: Marketing does not create the highest customer satisfaction in the business, nor does it create repeat buyers again and again. Nor does it make the competition race to copy their designs with every product release.
        However, as it is clear to everyone on ZDnet, you are intensely jealous of Apple and bitter that it did not fail as you hoped and prayed that it would and so you feel the need to rationalize their success anyway you can.
        Tigertank
  • The Vultures are Lining Up!

    We saw already how Apple could/would be without "Apple" fanbois and fangurls - stagnant. As soon as he goes on leave or actually leave the company, sell your shares!

    Note: How many lawyers for a software company makes $650,000 in a salary and another $28 million+ in incentives? :-) Apple keeps getting sued and suing others.
    Gis Bun
    • They are circling the trolls.

      @Gis Bun
      Out of curiousity, when did we see Apple without it's fans?

      [i]Apple keeps getting sued and suing others.[/i]
      Name a major corporation (tech or otherwise) that enforces copyright protection that does not. Really, name one.
      Tigertank
    • A

      @Gis Bun
      matthew_maurice
  • Presumably...

    ...in the event of Steve Jobs' disability, the board appoints an acting CEO and life goes on until Mr. Jobs recovers, resigns, or dies. That is the way things work in most companies. Certainly, it would be prudent for the board (on the nomination of Mr. Jobs) to appoint a second in command (who would serve at the pleasure of the board), and the stockholders might be justified in insisting that they do so, but that's as far as it should go.
    John L. Ries
  • RE: Apple, shareholder joust over CEO succession plan proposal

    So is there no one internally qualified for this job? Gotta make you wonder why this is for ANY company? I know my company has a handful of people who I feel could sucesfully step in as CEO.
    omdguy