Apple don't need no stinking CEO succession plan
Company urging shareholders to vote against proposal to prepare for eventual departure of Steve Jobs
Does Apple think co-founder and chief executive Steve Jobs will be around forever?
Probably not, but the company certainly is in no hurry to establish a formal -- or at least public -- CEO succession plan.
According to the International Business Times, Apple recommended to shareholders in a recent filing with the federal Securities and Exchange Commission that they vote against the "proposal entitled 'Amend the Company's Corporate Governance Guidelines to adopt and disclose a written CEO succession planning policy'" at next month's annual shareholders' meeting.
Apparently the Central Laborers' Pension Fund, which owns 11,484 shares of Apple (NASDAQ: AAPL), wants a formal plan in place for choosing a new chief executive. The CLPF also wants to see criteria developed for selecting a new CEO and for the company to begin identifying and grooming internal candidates.
Not only that, the fund thinks Apple's board of directors should begin "CEO succession planning at least 3 years before an expected transition" and to issue annual reports on where the succession strategy stands, according to the ITB article.
Planning ahead for major changes is always a good idea, but Apple sees some potential downside to the proposal, arguing that it "would give the Company's competitors an unfair advantage," ITB reports.
[Apple] further stated that proposal would "undermine the Company's efforts to recruit and retain executives. The Board believes that the Company's success depends on attracting and retaining a superior executive team, including the CEO. Proposal No. 5 requires a report identifying the candidates being considered for CEO, as well as the criteria used to evaluate each candidate. By publicly naming these potential successors, Proposal No. 5 invites competitors to recruit high-value executives away from Apple. Furthermore, executives who are not identified as potential successors may choose to voluntarily leave the Company."
Understandable concerns, but isn't there always a short list of internal candidates for any large corporation's corner office, names that industry watchers are familiar with?
Given the health history of Jobs -- a diagnosis of pancreatic cancer (resulting in a tumor removal in 2004) and a six-month leave of absence in 2009 for health reasons -- it would be ill-advised not to have a succession plan in place. Does it have to be as formal or public as the one proposed by the pension fund? Probably not.
Hopefully Apple is opposed only to the public nature of the proposed succession plan, and not the idea of a succession plan itself. As Apple shareholders know all too well from the company's slump prior to the return of Jobs in 1997, the wrong chief executive can do a lot of damage to a company. Ignoring reality now could be disastrous down the road. Best to be prepared.
Chris Nerney writes about the business side of technology market strategies and trends, legal issues, leadership changes, mergers, venture capital, IPOs and technology stocks. Follow him on Twitter @ChrisNerney.