Apple's Board: New Blood Needed

Google's Schmidt is out, and Apple COO Tim Cook may soon be in. That's great, but Apple's directors still need to rectify their track record of mishandled PR

By Arik Hesseldahl

Apple boasts one of the technology industry's most luminary-rich boards, and the company has been riding a wave of hit products and financial success. But Apple has also endured public relations missteps that future directors will need to take care not to repeat.

In the latest public flare-up, Google (GOOG) Chief Executive Eric Schmidt resigned his seat as an Apple director on Aug. 3 following a dustup between the companies over distribution of Google software on Apple's hit iPhone. The same day, the Federal Trade Commission said it plans to continue an inquiry it launched in May into the interlocking board relationship between the two companies. While the FTC commended Apple for Schmidt's resignation, Genentech Chairman Arthur Levinson still sits on both companies' boards, a possible violation of federal antitrust rules.

Apple's board has also been criticized for its handling of disclosures about CEO Steve Jobs' health and failing to quickly take decisive steps to clear up a controversy about stock-option pricing several years ago.

Beside Jobs, the board's glittery directors include former Vice-President Al Gore, Intuit Chairman Bill Campbell, Avon CEO Andrea Jung, and J. Crew Group (JCG) CEO Millard Drexler.

Now recruiters and other Apple observers say the company may need new blood in its boardroom to tap into fresh thinking and establish a clearer line of succession should Jobs need to leave permanently. Apple declined to comment.

Cook Can Stand Up to Jobs

Apple's next move could be to elevate Chief Operating Officer Tim Cook to the board of directors. Cook is Apple's second-in-command behind Jobs and has twice stepped up to run day-to-day operations when Jobs was on sick leave. His most recent stint was during Jobs' six-month break during the first half of this year, when Jobs underwent a liver transplant.

Adding Cook to Apple's board would telegraph to the outside world that he is Jobs' chosen successor, says Stephen Mader, vice-chairman and managing director for board services at executive recruiter Korn/Ferry International (KFY). "If Cook joins the board, it's tantamount to announcing that he'll be Steve's ultimate successor if and when the time for that comes," Mader says.

Cook, one of a handful of senior Apple executives who work very closely with Jobs on major strategic matters, has been described by people familiar with the company's operations as one of the few who can stand up to Jobs when necessary.

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