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MARCH 27, 2003 BYTE OF THE APPLE By Alex Salkever Why Apple Shouldn't Vote for Gore The failed Presidential contender is a business novice whose board nomination raises more questions about Apple's governance
Now comes 2000 Democratic Presidential nominee Albert Gore Jr., another former Tennessee senator, who has accepted nomination to Apple Computer's (AAPL ) board of directors. If past is prologue, Apple shareholders better keep their eyes open and their ears peeled. UNSETTLING MESSAGE. Don't get me wrong. Monks' Investing Theorem is a random observation meant in jest. Gore is a savvy politician with a keen interest in technology and culture. He popularized the term "information superhighway" and even took to poking fun at himself for hinting during the early stages of his 2000 Presidential campaign that he was instrumental in the Internet's creation. As smart as he might be, however, he doesn't belong on Apple's board. Sure, he can open doors in Washington -- often cited as a big reason for board appointments. But he could do that as a special counsel to Apple. I think the larger truth that Monks was getting at is that politicians generally make lousy board members. Investors invariably view such appointments as, well, political, and not necessarily in their best interests. Shareholder activist Nell Minow, editor of The Corporate Library, points out an additional problem with politicans: The worlds of politics and business, while they're intertwined, are quite different. And in business, politicians "don't know what they don't know," says Minow. With its stock price down over the past two years, the last thing Apple shareholders want or need is a celebrity director with zero business experience, aside from the business of fund-raising and politicking. Gore might make a wonderful contribution to Apple in some other capacity. But Jobs & Co. should think long and hard about the message it sends to shareholders with this appointment. FRIENDS OF STEVE. This isn't the first time that Apple's board moves has raised watchdogs' ire. In BusinessWeek's annual assessment of corporate boards last September, Apple came up wanting (see BW, 10/7/03, "The Best & Worst Boards"). Gore's appointment underscores that Steve Jobs doesn't really take the idea of a board of directors very seriously. Apple declined to comment for this story, pointing instead to press releases outlining Gore's extensive résumé and interest in educational issues, which it believes will complement its lead in the classroom. Corporate-governance experts take a dimmer view. "If you don't know the difference between a 10K and 10Q in your sleep, you shouldn't be on the board of a public company. I'm sure Al Gore is thinking he's going to be doing what he likes to do and thinking about big policy issues. But the job of a board member is to set the CEO's compensation," says Minow. Gore did not respond to several attempts to contact him through his office in Tennessee. For investors concerned about board independence, a look at Apple's current directors isn't encouraging. There's Bill Campbell, chairman and former CEO of successful financial-software concern Intuit (INTU ). But Campbell is a former Apple exec and a friend of Steve, so he's hardly an impartial outsider. Also on the board is Millard "Mickey" Drexler, another CEO pal. Jerry York, president and chief exec of tech retailer and wholesaler Micro Warehouse, has a solid reputation and still earns good marks even though his outfit derives 3% of its annual revenues from sales of Apple products. Arthur Levinson is the science wiz and CEO of biotech outfit Genentech (DNA ), which is a large Apple corporate customer. Finally, there's Jobs and now Gore.
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