Apple's shareholders may ask the company to post a written succession plan, if a proposal from a pension fund covering laborers goes through.
The proposal, from the Central Laborer's Pension Fund, was filed in August, before Jobs' health problems came to light. It calls for the company to develop internal CEO candidates, plan for succession at least three years in advance, and adopt specific criteria for new CEOs. The pension fund holds some 11,484 shares, or $3.89 million at Wednesday's closing price. A vote is planned for the shareholders' meeting on Feb. 23.
That sounds like good practice in any case, and it is, but the sticking point for Apple has to produce a report to shareholders and review the plan every year. Apple says that it already conducts annual reviews and has a formal process to vet internal candidates. An annual report would require disclosing the candidates for the CEO spot, and that, the company says, would put it at a competitive disadvantage. On top of that, people not identified as potential CEOs may decide to leave the company. Apple has asked that shareholders vote against the plan,
Jennifer O'Dell, assistant director of corporate affairs at the Laborers International Union of America, said management has misconstrued the proposal. We don't want the name of the person, just the policy, she said. When we looked for disclosure on CEO succession we didn't find anything.
But O'Dell noted that another reason for floating the idea is that many companies hire outsiders to be CEO, and they often have to lure them in with big bonuses or large compensation packages. It might make more sense if they develop internal candidates, she said.
O'Dell added that LIUNA has heard from other shareholders who seem supportive. Institutional Shareholder Services, an influential advisory firm, has yet to weigh in on the issue.
The California Public Employees' Retirement System, one of the largest pension funds in the country, has also not made clear how it will vote. However, Anne Simpson, CalPERS Senior Portfolio Manager in charge of corporate governance, said, CalPERS supports disclosure of succession planning -- it's a critical part of risk management. If companies simply don't get that, then the SEC should address the issue as a disclosure requirement for boards. CalPERS owns $847.1 million of Apple stock.