Apple Shareholders Demand CEO Succession Plan
With Steve Jobs off sick, Apple’s shareholders are knocking at the door
Apple shareholders are reportedly putting pressure on the company to publish its CEO succession plan, following the announcement that Steve Jobs is taking a medical leave of absence.
The Laborers’ International Union of North America (LIUNA) announced yesterday that a shareholder proposal to require Apple to disclose a CEO succession plan had won the support of Institutional Shareholder Services (ISS) – which helps institutional investors decide how to vote on shareholder propositions.
“ISS believes that shareholders would benefit by having a report on the company’s succession plans disclosed annually,” said ISS in its analysis of the proposal. “Such a report would enable shareholders to judge the board on its readiness and willingness to meet the demands of succession planning based on the circumstances at that time.”
Jobs’ health troubles
Fifty-five-year-old Steve Jobs received treatment for pancreatic cancer in 2004 and took a leave of absence from Apple in 2009, during which he received a liver transplant. In 2010, he led the company from the front, handling the iPhone 4 antenna controversy personally, and winning the Financial Times’ Person of the Year award, as Apple’s profits continued to grow.
However, on 14 January Jobs announced in an email to employees that the board of directors had granted him a new medical leave of absence, to enable him to focus on his health. He explained that he would continue as Apple’s chief executive and would be involved in the company’s major strategic decisions, but chief operating officer Tim Cook will handle day-to-day operations.
“I love Apple so much and hope to be back as soon as I can,” said Jobs in the email. “In the meantime, my family and I would deeply appreciate respect for our privacy.”
The news resulted in Apple shares opening about six percent lower in New York the following Tuesday, after a long weekend in the United States. However, they recovered during the day’s trading to close down 2.25 percent at $340.65 (£211.56).
iPhone and iPad sales drive Apple growth
Apple has since announced record sales of its products and recorded its highest-ever earnings and revenue for its fiscal 2011 first quarter, which closed on Christmas Day. The company reported a staggering quarterly net profit of $6 billion (£3.75bn), or $6.43 (£4.02) per diluted share, on revenue of $26.74 billion (£16.7bn).
On the Nasdaq Stock Market, where it trades as AAPL, Apple’s shares are currently worth $343.44 (£213.22).
Despite this, Gleacher & Co. analyst Brian Marshall predicts that Tim Cook will be stepping into Steve Jobs’ shoes before long.
“Running a $100 billion (£62 billion) annual revenue company while being forced to take periodic medical leaves is not fair to anyone (eg, most of all to Jobs, AAPL investors or its employees/board),” Marshall wrote in an 18 January note. “Cook has performed flawlessly in the past as AAPL’s interim CEO and we expect he will become the full-time CEO of Apple this year with Jobs hopefully serving as a senior advisor.”
Apple shareholders will have the opportunity to vote on the CEO succession proposal during the company’s annual meeting on 23 February. Apple asked shareholders to vote against the proposal in its proxy statement released on 7 January, claiming that divulging its succession plan would give its rivals an unfair advantage, undermine its efforts to recruit and retain executives, and constrain its board.
