Apple's Annual Meeting: Not Much Concern About Succession

Posted by: Peter Burrows on February 25

I spoke with a number of investors before and after the meeting, and not one of them seemed all that concerned about the possibility that Steve Jobs might not be able to return from medical leave to run the company full-time. “He’s been there so long, that I’m sure the company can carry forward his ideas,” said long-time Mac fan Susanne Segal. Greg Strikeleather, who set up Apple’s first usability lab while working at the company in the early 1980s, felt the same way. “There’s a lot more core Apple DNA than is suggested by the focus on Steve. If he couldn’t come back, there would be a stock hit. But it would be temporary. I still think this is Apple’s time,” he says.

My sense is that Tim Cook’s calm, confident handling of the meeting may have eased some succession concerns as well. Cook didn’t seem at all out of his element, as he answered questions or doled them out for board members and other exeuctives to answer. His reputation is as the humorless, wonky operations type, but he injected moments of levity into the meeting. He marvelled that Apple had passed Wal-Mart to become the leading retailer of music in 2008. “Can you believe that Apple sold more of something than Wal-Mart!?,” he asked rhetorically. And when one gadfly in the audience drew guffaws after muttering that the authors of one shareholder proposal were “socialists,” Cook picked up on the theme when he began the Q&A period: “Now let’s open the floor to questions from conservatives and socialists alike,” he said to laughs from the packed auditorium.

No doubt, Cook lacks Jobs’ gravitas, charisma and pitchman-ship. “Cook is your typical American corporate officer type, while Steve Jobs has the finest theatrical presence of any executive I know of, with the possible exception of Virgin’s Richard Branson,” says shareholder Daniel O’Donnell, an IT professional from Los Angeles. But while Apple’s brand has been built largely around Jobs, O’Donnell doubts Jobs’ role as front-man will be as important now that Apple sells to mainstream consumers, as opposed to the avid computer fans it used to court. “Perhaps the public’s perceptions of Apple now has more to do with its products, rather than with Steve Jobs.”

In all, the tone of the event was remarkably upbeat given what’s happening in the world, and given Jobs’ health problem. Indeed, the only complaints centered on Apple’s relative lack of transparency—not on the substance of what the company is doing, but on the degree to which it shares that substance with the company’s owners. The company repeatedly refused to divulge details of its succession plans, about Jobs’ health, and even declined to give the final vote tallies on the four shareholder proposals presented during the meeting. While none of them were passed, those tallies won’t be made public until the company issues its next 10-Q later this Spring. For example, one proposal asked that the board create an advisory board so shareholders could give their thoughts on the board’s compensation policies. Although shareholders actually passed the measure last year—a rarity—the board didn’t take action since the vote is non binding. While the measure didn’t pass this time, it nonetheless would have made news had it come close. By the time we know the facts, it’s doubtful anyone will much care.

But even on the topic of corporate governance, there was good news. In the past, shareholder advocates have complained that they never got the chance to address their questions directly to board members. Today, board members fielded two or three questions themselves. Genentech CEO Art Levinson stood to defend the company’s succession planning process, and compensation committee chairman Bill Campbell explained why the board refused to adopt the proposed “say on pay” practice. Neither gave an inch or divulged any new information, but just having them there was a step forward. “At least we got to hear from directors—that’s light years ahead of where they’ve been,” says AFL-CIO rep Scott Adams, who spoke for the “say on pay” proposal.

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