Shareholders did right by Apple (Nasdaq: AAPL ) today. They refused to vote up a proposal that would have required the board to name candidates to replace Steve Jobs as CEO, who is on his third medical leave since returning to the company in 1997.
Please don't misunderstand me. I'm not denigrating the proposal itself or the idea of a succession plan. The Central Laborers' Pension Fund of Illinois showed good intentions in pitching its proposal, but the requirements made it untenable. Here's the breakdown as provided on page 41 of Apple's proxy statement:
- The Board of Directors will review the plan annually.
- The Board will develop criteria for the CEO position, which will reflect the Company's business strategy and will use a formal assessment process to evaluate candidates.
- The Board will identify and develop internal candidates.
- The Board will begin non-emergency CEO succession planning at least 3 years before an expected transition and will maintain an emergency succession plan that is reviewed annually.
- The Board will annually produce a report on its succession plan to shareholders.
Apple included a broad rebuttal to the proposal in the proxy, but in reality it comes down to just one line: "By publicly naming these potential successors, Proposal No. 5 invites competitors to recruit high-value executives away from Apple."
I'll understand if you think that sounds like an excuse, but according to data at LinkedIn, ex-Apple employees most often leave for Cisco Systems (Nasdaq: CSCO ) , Google (Nasdaq: GOOG ) , and -- wait for it -- Microsoft (Nasdaq: MSFT ) .
You can bet the board has access to even more detailed statistics, and given the competitive nature of Apple's business, and the company's history of secrecy, it's not in the least surprising to see the Mac maker do whatever it can to hold onto its best talent. With Jobs sick, Apple's bench has never been more important.
Do you agree? Disagree? Let us know what you think about Steve Jobs' health, the performance of Apple's board, and the need for a public succession plan using the comments box below. You can also rate Apple in Motley Fool CAPS.