A proposal on the agenda at Apple’s upcoming annual shareholders meeting asks the company to disclose its CEO succession plan. The company’s board of directors is resisting the move, but now shareholders will vote in the wake of Monday’s news that Steve Jobs is taking another medical leave, his third in seven years.
The proposal, which will be voted on at the Feb. 23 meeting, was introduced by the Central Laborers Pension Fund, which holds about 11,484 shares. It lists five elements of a core succession planning policy that Apple should have in place and would require the board to disclose its policy. Apple’s board has recommended a “No” vote on the proposal, saying it would hurt the company’s competitive position. (See Proposal No. 5 on p. 41 of the shareholders meeting announcement.)
The pension fund’s proposal is part of a wider effort by the Laborers International Union of North America (LIUNA) to get companies to be more public about their succession planning. About 20 or companies, including Whole Foods and Wells Fargo, have adopted the union’s proposals, says Jennifer O’Dell, assistant director of LIUNA’s office of corporate affairs. O’Dell tells Fast Company that LIUNA will be filing shareholder proposals similar to the Apple one with about 10 other companies this year.
LIUNA represents about half a million construction workers. It has over 100 benefit plans, including the Central Laborers Pension Fund.
LIUNA’s proposal would require that the board review the succession plan on an annual basis; that it develop criteria for choosing a new CEO that reflect the company’s strategic objectives; that the board develop and identify candidates from within the company; that it begin non-emergency succession planning at least three years before an expected transition; and that the board report on its succession plan to shareholders.
While reviewing the companies in its fund portfolios, LIUNA discovered that most companies do have such plans. “But we think it needs to be disclosed,” O’Dell said.
In its statement in the meeting notice, which is filed with the SEC, Apple’s board said it already has the necessary processes in place for dealing with a transition. “The Company recognizes that a highly talented and experienced management team, not just the CEO, is critical to Apple’s success,” the board’s statement says. “Accordingly, the Board already implements many of the proposed actions and maintains a comprehensive succession plan throughout the organization.”
The board said publishing a plan would impact their ability to attract executive talent and would give competitors “an unfair advantage.” “Proposal No. 5 would publicize the Company’s confidential objectives and plans,” says its statement in the meeting notice. “Giving competitors access to this information is not in the best interest of the Company or its shareholders.”
O’Dell said LIUNA is not looking for companies like Apple to publicize the name of the intended successor. “We don’t think that’s good for shareholders. That could harm
Apple being able to find a candidate,” she said.
The union simply wants the company to publicize that it has a plan that meets their criteria. “We’re concerned as long-term shareholders that they don’t have a plan place,” O’Dell said. “If they do, they’re not disclosing it. And at Apple, more than any place, where they have this leader who represents the corporation, we want to make sure they have someone in place long-term.”
[Image: Flickr user Annie Bannanie 09]