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Pension fund targets Apple board

Activist Apple shareholder and pension fund CalPERS has voted to throw out Apple's board but won't present its own list.

"Just vote no."

This is not a catch phrase in some political campaign, but rather the essence of the policy for Apple (AAPL) shareholder activist and pension fund giant CalPERS.

The California Public Employees' Retirement System's negativity was felt at Apple's annual shareholders meeting earlier this year, when CalPERS voted against re-electing the company's board of directors to another term.

But if Apple investors expect CalPERS to overwrite the current board with its own slate of directors, they may be waiting a long time.

The nation's largest pension fund has not taken that tactic against companies it's targeted since 1993, CalPERS spokesman Brad Pacheco said yesterday.

Back in '92-'93, CalPERS nominated 30 prospective directors to unseat board members on such Fortune 500 companies as Time Warner, Westinghouse and US Air, Pacheco said.

But CalPERS has since chosen to focus on improving existing boards, or voting them out.

"If we're not happy with a company's board, we'll vote against them at the next shareholders meeting," Pacheco said. "It's something that a lot of institutional investors do now, rather than be in the business of naming directors."

He added details on the reasons for the shift were not immediately known.

Meanwhile, one member of Apple's board of directors is not worried about CalPERS's interest in the company.

"We're focused on improving the company and its performance," said director Edgar Woolard, last night. "Personally, I'm not concerned about CalPERS. They can do whatever they want."

Woolard, who joined Apple's board in 1996, was the one to inform embattled Apple chief executive Gilbert Amelio that the directors wanted him to resign, according to a report in the San Jose Mercury News.

Woolard is one of six outside directors that comprise Apple's board, which also included Amelio. The directors come from industries as diverse as mergers and acquisitions consulting to aerospace. And two of them were around to hire and fire three chief executives in the past four years.

Apple, which posted a $708 million net loss in the second quarter and has been losing market share, has been battered by a falling stock price that recently dipped to its lowest level in over a decade.

CalPERS last February placed Apple on its top ten list of underperforming companies. It flagged the computer maker for poor financial performance, a lagging stock price, and for electing directors who did not themselves hold a sizable stake in the company.

CalPERS questions what incentive these members have to turn around the ailing computer maker.

CalPERS, which owns 709,565 shares in Apple, said it holds less than a 1 percent stake in virtually all the companies in its vast $108 billion portfolio.

The pension fund, even in conjunction with other institutional investors, rarely has enough shares to act alone in ousting board members via its vote. But Pacheco noted CalPERS uses its vote to serve other purposes.

"The idea of voting against the directors is more about sending a message," Pacheco said.

Apple two weeks ago canceled its meeting with CalPERS due an issue its board had to address, Pacheco said. Then, in the following week, the computer maker announced Amelio had resigned.

CalPERS is awaiting word on a new date for the meeting, where it hopes to hear Apple's plans for finding a new CEO and plans to point the company toward profitability. 

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