Apple puts board re-election in the hands of shareholders
Company surprises shareholders at annual meeting by announcing a policy they had long sought: requiring directors to win a majority vote before being elected to the board.
CUPERTINO, Calif.--Apple this morning, at the start of its annual shareholders meeting, announced that the company is adopting a new policy requiring its directors to win a majority vote before being elected to the board.
The announcement preempted a related shareholder motion that had been proposed for the meeting.
Apple General Counsel Bruce Sewell said the board has gone against this policy for years due to the complexity it adds, but that shareholders over the past few years have been overwhelmingly for it.
"This is Apple and we don't let complexity get in the way," Sewell said. As part of the plan, Apple will now require directors who do not manage to secure a majority vote to voluntarily resign their positions.
The policy will be in place at next year's shareholders meeting, Sewell said. In the meantime, the company's board members have agreed to tender their resignations if a majority vote on their re-election is not met, which in the case of this meeting was not an issue, with the entire board's shareholder approval ratings holding in the 80 and 90 percent ranges.
Apple shareholders did not, however, approve three other proposals including a conflict of interest report targeting board member and former U.S. Vice President Al Gore, a proposal on shareholder say on director pay, and a proposal about reporting on political contributions and expenditures.
The meeting comes at a time when shares of the company's stock have recently hit new all-time highs, and on the heels of the company's most profitable quarter yet. There's also been increasing buzz about a possible news event early next month in which the company is expected to show off its next iPad. Last year, Apple picked the morning of the shareholders meeting to send out invitations to the event that would bring the iPad 2.
Ahead of the meeting, activist group SumOfUs delivered printed copies of an Internet petition asking the company to demand improved working conditions for workers at the overseas factories of its manufacturing partners. It was the same petition brought to Apple's retail stores earlier this month, with the added inclusion of some 30,000 signatures from GetUp.org.au.
Yesterday the group said it was aiming to get 100,000 signatures ahead of bringing it to the company, a goal that fell about 10,000 short. Along with delivering it to Apple's headquarters, the group brought it to an unknown number of the company's retail stores.
The meeting was the first with Cook as CEO, however he was in charge of last year's meeting as well, with Jobs having announced what would be his last medical leave the month prior. One of the main shareholder proposals of that meeting was an effort to make Apple's CEO succession plan more transparent in light of the health concerns surrounding Jobs. That proposal did not pass.
Tidbits from the Q&A
Following business, the company launched into a question-and-answer session with shareholders, who were able to ask Cook, along with Apple senior vice presidents Phil Schiller and Peter Oppenheimer, about anything and everything.
On Apple's cash pile:
"I'd be the first to admit we have more cash than we need to run the daily business," Cook said, reiterating a statement he made last week while talking to Goldman Sachs last week. "So we're actively discussing it. I only ask for a bit of patience, so we can do it in a way that's best for the shareholders."
On content:
Cook said that content sold on the company's digital stores, which includes things like music, TV shows, and movies, is not about profit, but about giving users something to put on their devices. The real profit came in selling those devices, Cook said.
On Apple's relationship with Facebook:
"We do a lot with them," Cook said, adding that users of Apple's products use Facebook a lot. It's "not like there's a significant overlap in what we do," Cook explained. "I've always thought the two companies could do more together."
Interestingly, Cook also mentioned that the company's iMessage service, which lets users send messages to one another on iOS and now Mac computers, can be construed as a social network in and of itself.
On Apple doing a TV set:
Cook waved off a question about the company doing a TV set--a shareholder asked him directly if he should go return a TV he just bought. Cook told the man to buy an Apple TV set-top box instead.
On the ad spots Apple buys to run on TV shows:
Answering a question whether the company had plans to improve how it advertises on TV, specifically what TV shows and networks it puts its ads on, Cook said "we've tried to always be the leader in this," adding that the company does things "substantially different" from others. "We don't always have the same viewpoint as a TV show, but we go out of our way to protect kids," Cook said. "It's how we're wired and how we think."
On whether the company was working on a "home of the future":
Schiller told the shareholder that not to "believe everything you read."
On a comment about the company needing to invest more in students:
Cook went into detail on how the company began an employee gift matching program last year, and that the percentage of gifts employees had made to scholarships and other education-related efforts was "incredible," adding that "it's just the start, and it's really big." Cook also pointed to the company's efforts to digitize textbooks from its iBooks 2 and iBooks Author event last month in New York as ways it was attempting to make strides in education.
On a stock split:
Cook answered a question on if the company could explain the pros and cons of a stock split by saying the board talks about everything that would be in the shareholders' interest. "A stock split isn't so clear to be honest," Cook said. According to him, Apple's charted out how stock splits have worked for "many" other companies and hasn't come up with an answer. "There might be a short term pop, but for a lot it does nothing," Cook said.
Surprisingly, there weren't any questions or outright criticisms from shareholders about overseas labor, which has become a hot-button topic in the past two months. Also, the environment, which has historically been brought up during the question-and-answer section, was not among the topics asked about. Apple released an updated version of its report, with details of its North Carolina data center and adjacent solar farm earlier this week.
Updated at 11:50 a.m. PT with additional details from the meeting.