Apple Investors Aren't Stressed About Succession Planning

Apple Computer CEO Steve Jobs
Apple Computer CEO Steve Jobs

Despite the stock gyrations every time Apple's visionary CEO Steve Jobs takes a medical leave or questions about his poor health reappear, investors at Apple's (AAPL) annual shareholders meeting Wednesday seemed rather blase about the company's need to articulate its CEO succession plans.

Investors rejected, according to preliminary voting results, a shareholder proposal by the Central Laborers' Pension Fund, which called for Apple's board of directors to establish guidelines for adopting and disclosing a written CEO succession policy. Not only did investors turn their back on the proposal but none asked Apple management any questions about Jobs's current medical leave, the status of his health, when they expected him back (if ever) and how the company is positioned to move forward in his absence.

"I was disappointed with the results but not surprised," says Jennifer O'Dell, assistant director of corporate affairs for the pension fund, which submitted the proposal in September -- months before Jobs announced his third medical leave in January. "I think it's a victory for shareholders, nonetheless, because it raised awareness of the need."

The pension fund, which represents roughly 500,000 construction workers in the U.S. and Canada, plans to resubmit its proposal next year. In the meantime, O'Dell says, it hopes Apple's management and board will want to discuss some of its proposal's elements and consider implementing them.

Happy With Tim Cook

Some of the fund's recommendations are to develop a succession planning policy that's reviewed annually by the board, develop a criteria for assessing potential candidates and begin nonemergency CEO succession planning at least three years before an expected transition. Apple had previously stated in the proxy that it opposed the pension fund's plan and that it already performs a number of the proposed actions.

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Several investors said after the meeting that they're just fine with having Tim Cook, Apple's chief operating officer and Jobs's right-hand man, run the show in the CEO's absence and take over on a permanent basis should that be needed.

"Tim Cook is doing a great job, just look at his bonus," quips George Crab, who holds 500 Apple shares and invested in the company shortly after it went public in 1980. "Even if Steve doesn't come back, he sees three to five years ahead [with his product vision], and Tim knows what to do with that."

Investor Bill Vorbau purchased his Apple holdings years ago when it was trading around $20 a share and sold all but two shares five years ago. He he thinks Apple has already made it clear that Cook will be the one to succeed Jobs, if and when it's needed.

But What About Google's Android?

Cook has also been the go-to guy when Jobs took medical leave in 2004 to treatment a rare form of pancreatic cancer and also in 2009 when Jobs underwent a liver transplant. Apple investor Jerry Kaplan, who holds a couple-hundred shares, says the issue of a succession plan is "overblown."

"This isn't a one-person company," Kaplan says. "I'm pretty happy with the way Apple is progressing [without Jobs]."

While investors were quiet on the succession front during the meeting, one issue that repeatedly came up was the threat of Google's (GOOG) Android mobile operating system. Investors questioned Cook on Apple's plans to address the growing threat and Android's market share lead over Apple.

One investor compared Google's Android vs. Apple iOS to the Microsoft Windows and Apple tussle from years ago. He asked Cook and Apple executives whether they learned anything from their Microsoft battles and if they were applying it to Android.

The comparison was rejected, with Cook adding that the Microsoft battle was over corporate customers, whereas the Android fight is about consumers.

Up Next: A March 2 Press Event

Some investors also questioned Cook about the iPad tablet computer and whether it's facing a June delay, following recent industry reports. Their concern are understandable: If the iPad relaunch slips to June, it likely would have lighter June-quarter sales since the device could have potentially missed the bulk of three months of sales. Apple's next iPhone version isn't anticipated to hit the stores until sometime around late June, providing little ability to offset any lost iPad sales.

Cook said he can't comment on new products until they're officially announced, but he directed investors to check out recent press reports saying Apple is holding a press event on March 2. Some of those reports say the event will feature an unveiling of the iPad 2. According to a Reuters report, the event will feature a product that Apple believes will define 2011.

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