Tim Cook to shareholders: It was the 'mother of all years'

CUPERTINO, Calif. -- Apple CEO Tim Cook tried to reassure shareholders today, saying that the company was disappointed by its falling stock price but also that Apple is committed to its long-term strategy.

The meeting itself, which took place here this morning, was business as usual.

As expected, shareholders voted to re-elect all eight of Apple's board members. That includes Andrea Jung, Apple's only female board member, who was forced to resign as the chief executive of Avon last year and now serves as a senior adviser for the beauty products company.

The stakes were a bit higher this year for board members who did not manage to secure a majority vote from shareholders. A new provision, approved by shareholders last year, required board members who did not make the cut to voluntarily resign their position.

The company was also mum about the stock split rumor that surfaced yesterday.

In addition, shareholders voted down two shareholder-created proposals: one that dealt with executives holding a certain amount of company stock, and another asking for Apple's board to create a human rights committee.

The one dealing with executive stock asked for Apple's top executives to hold onto at least 33 percent of their shares until they reach the age of retirement, a requirement the proposal's creator says would "focus our executives on our company's long-term success."

In a filing ahead of the meeting, Apple called the initiative "unnecessary," given that the company's board already had a compensation committee, and warned that it would "restrict the executives' ability to diversify their portfolios."

The other failed shareholder initiative called for Apple to create a board committee on human rights that would evaluate the company's supply chain and its overall operations, something Apple's board also rallied against. In a filing, Apple's board argued that it already has a Supplier Code of Conduct that's policed by an internal auditing team, and that the creation of such a venture would "distract" Apple's board.

Apple's struggling stock
What was on the minds of shareholders, of course, was the stock price, which has tumbled roughly 37 percent since reaching a high a few months ago.

"I don't like it either," said Cook, who didn't take any action when it came to returning cash to shareholders. Nor does the board and management, he said.

Cook said that the company is focused on the long term and making the very best products, and that Apple is working harder than ever and "has some great stuff coming." He went over the company's launches from last year -- "We had the mother of all years," he said -- including the 13-inch Retina MacBook Pro, which Cook says he uses every day.

Cook said that Apple would enter Turkey later this year. And, not surprisingly, he didn't give details about new products. "Obviously we're looking at new categories, but were not talking about that," he said.

During the Q&A part of the meeting, one shareholder asked why Apple doesn't use some of its cash hoard to go to war and capture more market share in the smartphone market.

Cook replied that Apple's not constraining its investment in research and development to grow a cash pile: "We invest in things we think are great to do. We invest in just a few things. We will add things but will do so deliberately." Regarding Android, he said that the market share numbers are hard to come by because Google doesn't release numbers, but it's clear that Android is on a lot if phones and tablets.

For Apple, Cook said, winning isn't about making the most. Apple wants to make the best, he said, pointing to Dell as an example of what can happen going the make-the-most route. Dell want to make the most PCs, he said, and Apple never wanted to do that. Where market share is important, he said, is to attract a platform and an ecosystem, and if you look at Apple's numbers, the iPhone was up 70 percent year over year, and "we've paid out billions to developers."

"We're cognizant of the competition," he said. "We don't have our head stuck in the sand." He said there's no one you'd rather be in a bunker with than these folks here, referring to Apple employees. There's a button Apple could push here to make the most, Cook said, but that's not good for Apple.

Cook also reiterated that he wasn't worried about the iPad Mini cannibalizing sales of the larger iPad.

The CEO noted that he's been at Apple for 15 years and has heard that same question about the iBook and the PowerBook and the iPod line. "My belief is that if we don't cannibalize, someone else will," he said.

Cook was also asked about human rights issues and working conditions. Last year Apple did about 400 audits on safety, the environment and human rights, he said. When Apple finds things, he said, the company reports them and fixes them. If everyone is paying attention, he said, "more companies will step forward."

That 'silly' lawsuit
The elephant in the room was, of course, a provision that was barred from voting following a successful shareholder lawsuit against Apple. The company had bundled together a handful of issues, including one that would eliminate "blank check" preferred stock into a single proposal, something Greenlight Capital filed suit against. A Manhattan judge last week sided with Greenlight, ultimately forcing Apple to pull the proposal entirely.

Cook was asked if he still thought hedge fund manager David Einhorn's lawsuit was silly.

"I do," said Cook. The lawsuit was not about whether Apple should return cash or how it should, he said. It was about shareholder rights. It was about whether, if Apple returned money, everyone should get a vote. In Apple's thinking, yes, you should get a vote, he said. "I strongly believe it was a silly slideshow."

That doesn't mean the discussion about cash allocation is silly, said Cook. It's something the board and management team discuss. Earlier at the meeting, Apple's general counsel, Bruce Sewell, noted that shareholders could not vote on the court-enjoined proposal about preferred stock, but said the company would provide more information about it at a later date.

At the end of today's meeting, Cook assured shareholders that they are on his mind. "We think about you a lot -- probably more than you know," he said.

By the time the meeting ended, however, Apple's stock was down more than $7 to around $441. That, of course, is painful to anyone who's clung to Apple's shares since the reached a high of more than $705 last September.