Investors put the screws on Apple after Jobs' death
Should the chairman and chief executive roles be split?
Sunday 09 October 2011
A leading shareholder in Apple has called on the technology giant to keep the chairman and chief executive roles separate following the death of Steve Jobs.
Mr Jobs, one of the world's most prominent business figures who co-founded Apple from his parents' house in 1976, was replaced as chief executive in August as his health deteriorated. However, he retained the chairman's role – it is far more unusual in the US than the UK to separate the two roles.
Tim Cook, the long-time chief operating officer, became chief executive. Many saw Mr Jobs's chairmanship as more of an honorary role, similar to that of a company president.
Despite suspicions that the separation was largely honorific, the $34bn pension fund of the Laborers' International Union of North America (Liuna) believes it would be better for Apple's oft-criticised corporate governance if Mr Cook did not also assume the chairman's role. Liuna owns shares in Apple through more than 100 different funds.
Jennifer O'Dell, assistant director of the Liuna corporate affairs team advising the funds, said: "We believe strongly the two positions should be separated. Our preference would be to have a chairman of the board and a chief executive officer."
Liuna demanded details of Apple's succession planning last year, when concerns were again growing over Mr Jobs's long fight with pancreatic cancer. The call failed, but the US's biggest pension fund, Calpers, won a battle to insist that Apple needed majority shareholder support to elect unopposed candidates on to its board.
"Shareholders need those two positions to be separated for transparency," said Ms O'Dell. "We would also like them to disclose what the succession plan is [now]. We're not asking Apple to reveal the name of the next chief executive officer, but how they develop internal candidates to one day fill that role and to know that an emergency plan is in place."
The Institutional Shareholder Services (ISS) corporate governance group would not comment directly on the Apple situation, but did say that it would "generally support independent chair proposals filed by investors". ISS added that it would "weigh in" should a share-holder make an independent chairman proposal ahead of Apple's next annual meeting in February.
A decision to keep the roles distinct would mean that Mr Cook would not have the same power over the organisation as his predecessor, who briefly established the company as the world's biggest this summer.
Peter Miesk, an equity analyst at Jefferies, said that the former US vice-president Al Gore, who is currently a director, could be in the running for the chairman's role. John Doerr, a non-executive at Google, could also be a candidate.
Mr Miesk also dismissed fears that Mr Jobs's death will lead to a substantial fall in the share price. Many people in Wall Street believed that Mr Jobs, one of the true pioneers of world business, with his ultra-sleek designs and uncanny ability to predict consumer trends, was integral to the Apple brand. Mr Miesk said: "We have spent the past 12 to 18 months looking at the business and understanding the new products it is working on. It looks to have a product road map for at least the next four to 10 years. We are very positive. We think the earnings estimates are too low for the products we think it is capable of. They will continue to have high market share."
Apple's shares held up fairly well last week, despite Mr Jobs's death on Wednesday and the muted reaction to the launch of the latest iPhone 4 on Tuesday. This was Mr Cook's first set-piece event without Mr Jobs, and he was not considered to have performed as well as his predecessor did at such events. Shares closed at $369.80 on Friday, down from a touch under $380 at the start of the week. Mr Cook's next major announcement comes on 18 October, when investors will be scouring his comments at Apple's fourth-quarter results for hints of the future direction of the company.
Apple told the world that Mr Jobs had passed away in a simple statement last week. It said: "Steve's brilliance, passion and energy were the source of countless innovations that enrich and improve all of our lives. The world is immeasurably better because of Steve."
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