Apple succession call nixed, board rule OK'd

CUPERTINO Thu Feb 24, 2011 4:50am IST

Apple COO Tim Cook (L) and CEO Steve Jobs answers questions during a press conference at Apple headquarters in Cupertino, California, July 16, 2010. REUTERS/Kimberly White/Files

Apple COO Tim Cook (L) and CEO Steve Jobs answers questions during a press conference at Apple headquarters in Cupertino, California, July 16, 2010.

Credit: Reuters/Kimberly White/Files

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CUPERTINO (Reuters) - Apple Inc shareholders rejected demands that the company disclose a succession plan for ailing chief Steve Jobs but approved a proposal giving them a bigger say in appointing directors.

At Apple's annual meeting on Wednesday, about 74 percent of votes cast favored a proposal by Calpers that unopposed candidates for the company's board receive a majority of votes to win election, according to the fund.

The vote provided one of the few moments of drama at an event not attended by Jobs, who is out on indefinite medical leave.

Tim Cook, Jobs' top lieutenant, took the spotlight instead. Clad casually in jeans and a sweater, he appeared very much in command and deftly fielded questions on topics from Apple's $60 billion cash pile to growing competition from the likes of Google Inc in mobile and revenue-sharing on the iPad.

Cook presented a predictably rosy snapshot of Apple and its fortunes, noting opportunities in smartphone, tablet and PC markets and the untapped potential among business customers.

Apple shares ended 1.2 percent higher at $342.62 on Nasdaq.

Calpers, the largest U.S. pension fund, is calling on 58 companies to adopt majority rather than plurality voting which allows unopposed directors to be elected easily. The $226 billion fund painted Wednesday's result as a victory for transparency and investor interests.

"It was very important that shareowners spoke, and spoke with conviction," Calpers senior portfolio manager Anne Simpson told Reuters after the vote. "The message was loud and clear."

Even with Jobs sidelined, shareholders of the world's most valuable technology company voted down a proposal to outline a plan for who will succeed the visionary chief. And not one shareholder asked about Jobs or his health, in an apparent sign of their growing confidence in the executive bench.

"I'm very impressed by Tim Cook," said Kirk DeBernardi, who has owned Apple shares for nearly a decade. "Shareholders come in with a certain amount of respect for Steve Jobs, that's why they don't come in and batter management with questions. Obviously they're going to keep it private."

Influential investor advisory firm Institutional Shareholder Services had thrown its weight behind a shareholder proposal to force Apple to disclose a succession plan.

"At least in the near term investors have nothing to gripe about. Despite overhang about the succession plan, it's performed in line with the market," said Rodman & Renshaw analyst Ashok Kumar. "If the stock underperformed, then I think institutions can force the hand of management or the board, but in this case ..., they have very little bargaining power."

Some investors have urged the company to make better use of its cash, whether via buybacks or dividends.

Chief Financial Officer Peter Oppenheimer told shareholders that Apple wants to retain its cash so that it can "very quickly take advantage of a strategic opportunity that would come along. And we're constantly keeping our eyes open."

COMPELLING DRAMA

Apple's annual meeting rarely yields financial forecasts or market projections, but it usually makes for good theater. Last year, with Jobs at center stage and the iPad waiting in the wings, investors focused on the company's cash.

Jobs remains on the minds of many people. He announced in January he would step away from the helm on medical leave, though he remains involved in strategic decision-making.

His absence comes at a crucial time. Apple is engaged in a battle in the smartphone market with Google, whose Android operating system was installed on more devices than Apple's for the first time in 2010.

But Apple's destiny has been closely tied to Jobs, a mercurial and charismatic leader who rescued the computer maker from near-death in 1996 after a 12-year absence from the company he co-founded.

Cook, an operations expert, is steering the company for the third time in seven years. He is considered the heir apparent at Apple. The company dominates the fledging tablet computer market it helped create with the iPad.

But it will confront a number of challenges this year.

Apple sent invitations to a special event on March 2. The company is widely expected to introduce a new thinner iPad at the event.

The company will also launch the fifth iteration of its popular iPhone as rivals from Motorola Mobility to Samsung Electronics apply pressure.

U.S. and European regulators are scrutinizing new Apple rules that give the company a cut of publishers' subscription revenue generated by applications for the iPhone and iPad.

"Steve Jobs is an exceptional individual. It's always going to be difficult to replace him," said ThinkEquity analyst Rajesh Ghai. "He's been such a critical part of Apple for the past 10-15 years. It's inconceivable at this point in time that someone can provide the same kind of leadership."

(Editing by Edwin Chan, Kenneth Li, Derek Caney, Steve Orlofsky and Richard Chang)

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