Pension giant challenging Apple over corporate governance
The largest public pension in the U.S. is aggressively going after Apple with an advisory shareholder resolution that aims to change the company's board election policies.
The California Public Employees' Retirement System is seeking to change the policies of Apple and 57 other large companies that make up a portion of its nearly $200 billion U.S. portfolio. By lobbying for new rules requiring a majority vote for directors, CalPERS is hoping to bring about higher board member accountability to shareholders.
News of CalPERS' push for corporate governance reform was first reported in March by BusinessWeek. After Apple resisted CalPERS' initial request, the pension fund submitted an advisory shareholder resolution, The Wall Street Journal reports.
"There is systemic risk when directors are not accountable," Anne Simpson, CalPERS' head of corporate governance, told the Journal in an interview Tuesday. Apple's current policy allows its directors to keep their seats with just a single vote in uncontested elections.
As of March 2010, CalPERS owned 2.2 million shares of Apple stock. By comparison, Apple CEO and co-founder Steve Jobs owns an estimated 5 million shares.
Apple is the first company that CalPERS has targeted with a shareholder resolution in its push for changes in corporate governance. The resolution will come up for a vote at the Cupertino, Calif., company's annual meeting in February.
CalPERS has a history of using its clout as the nation's largest pension fund to lobby for corporate reform. In 2004, CalPERS' president of the board was removed from his position in response to criticism that he was participating in corporate governance activism. Also in 2004, CalPERS warned Apple that it would vote no on all three of its shareholder measures.
According to the report, 20 of the 58 companies lobbied have agreed to CalPERS' proposal.
Apple's reticence may also stem from the fact that California law forces directors to step down if a majority-vote policy is in place and they fail to win a majority. In other states, the rules aren't typically binding, with boards reserving the right to ignore losing directors' offers to resign, the report noted.
The California Public Employees' Retirement System is seeking to change the policies of Apple and 57 other large companies that make up a portion of its nearly $200 billion U.S. portfolio. By lobbying for new rules requiring a majority vote for directors, CalPERS is hoping to bring about higher board member accountability to shareholders.
News of CalPERS' push for corporate governance reform was first reported in March by BusinessWeek. After Apple resisted CalPERS' initial request, the pension fund submitted an advisory shareholder resolution, The Wall Street Journal reports.
"There is systemic risk when directors are not accountable," Anne Simpson, CalPERS' head of corporate governance, told the Journal in an interview Tuesday. Apple's current policy allows its directors to keep their seats with just a single vote in uncontested elections.
As of March 2010, CalPERS owned 2.2 million shares of Apple stock. By comparison, Apple CEO and co-founder Steve Jobs owns an estimated 5 million shares.
Apple is the first company that CalPERS has targeted with a shareholder resolution in its push for changes in corporate governance. The resolution will come up for a vote at the Cupertino, Calif., company's annual meeting in February.
CalPERS has a history of using its clout as the nation's largest pension fund to lobby for corporate reform. In 2004, CalPERS' president of the board was removed from his position in response to criticism that he was participating in corporate governance activism. Also in 2004, CalPERS warned Apple that it would vote no on all three of its shareholder measures.
According to the report, 20 of the 58 companies lobbied have agreed to CalPERS' proposal.
Apple's reticence may also stem from the fact that California law forces directors to step down if a majority-vote policy is in place and they fail to win a majority. In other states, the rules aren't typically binding, with boards reserving the right to ignore losing directors' offers to resign, the report noted.
Comments
"There is systemic risk when directors are not accountable," Anne Simpson, CalPERS' head of corporate governance, told the Journal in an interview Tuesday.
With Apple now being the 3rd largest company in the world, and the 2nd largest in the US, it'll be difficult for Ms. Simpson to demonstrate this alleged risk. Especially since Apple's turnaround began by dissolving the old board of directors.
Whatever system Apple have, it seems to be working pretty well. I say leave Apple to do what they do best, however the hell they want to.
Typical players trying to muddle up an apparently well-working system. How much has Apple's worth increased - especially during a recession - and now there are folks with big egos that think they can do better?
Typical players trying to muddle up an apparently well-workin system. How much has Apple's worth increased - especially during a recession - and now there are folks with big egos that think they can do better?
Agree. If they don't like the way Apple is run, just sell their Apple stocks, I will buy.
Agree. If they don't like the way Apple is run, just sell their Apple stocks, I will buy.
Ummm, most board members don't own the stock in vast sums, they are there to represent the stockholders at large.(example Eric Schmidt...ok he was a fink, but he didn't own a vast sum of Apple stock)
I read 'corporate governance' as Apples basic 'board rules', example- how members are elected or nominated etc. But board rules could influence the type of member selected; they could give Steve more oversight...demand dividends if cash is not being invested etc, but that's just speculation.
With Apple now being the 3rd largest company in the world, and the 2nd largest in the US, it'll be difficult for Ms. Simpson to demonstrate this alleged risk. Especially since Apple's turnaround began by dissolving the old board of directors.
True... In the short term. Also, do you have a link about that board turnover, should be interesting reading.
True... In the short term. Also, do you have a link about that board turnover, should be interesting reading.
You can see it here, at 10:15: http://www.youtube.com/watch?v=PEHNrqPkefI
But I think it's worth watching the entire video just to see how far Apple has come.
Ummm, most board members don't own the stock in vast sums, they are there to represent the stockholders at large....
He was referring to CalPERS I believe.
Unions, as collective entities, should be barred from investing in corporate stocks or, doing so, relinquish their right to vote in stockholder votes... it's an obvious conflict of interest.
That's not socialism at all, it's the rapacious end of capitalism doing what it does best, squeezing as much money out of something as possible, as soon as possible, forget about the longer-term and forget about the customer.
Now that Apple is so huge they think they can not 'run it better' but can 'increase shareholder value' - ie - 'squeeze more cash out of it' and as someone else said above:
...demand dividends...
They see that huge pile of cash and they wants it, Precious. To hell with using it to place Apple strategically for the future, they want instant gratification now. In their minds it's really 'their' cash, not Apple's. And if they're a pension fund they may very well be jonesing for cash and fast.
Forget about keeping the Golden Goose alive into the future, let's 'increase shareholder value' by chaining the goose up in the basement where it's cheaper and feed it on less expensive food and less of it too, or if they're really dumb, cut it open now and get all the golden eggs.
Unions, as collective entities, should be barred from investing in corporate stocks or, doing so, relinquish their right to vote in stockholder votes... it's an obvious conflict of interest.
You should look at what they are trying to do instead of having a knee jerk reaction of calling "socialism". If anything what they are doing has a very capitalistic bent!
Agree. If they don't like the way Apple is run, just sell their Apple stocks, I will buy.
Ditto. Of course, I only control the pension fund for one individual.
What a joke.
Typical players trying to muddle up an apparently well-working system. How much has Apple's worth increased - especially during a recession - and now there are folks with big egos that think they can do better?
I don't see any indication that they think that they can do better. Instead, they think that certain replacement board members could do better.
Agree. If they don't like the way Apple is run, just sell their Apple stocks, I will buy.
They own a huge chunk of Apple. They want to protect the business that they own. They calculate that this strategy will yield bigger returns than selling their interest.
If indeed you want to buy 2.2 million shares of Apple, so you can too be a major owner, then do it. Today. I guarantee you that 2.2 million shares will magically appear for sale in various lots if you put in a market order. Right now.
Then you will too have a say in how management runs the company you own.
Yes, owners of huge American companies are socialists. They amass capital and deploy their capital buying huge chunks of the means of production, putting them into privately-owned hands, with the intent of using their capital to amass more capital, all of it distributed to the vicious socialists to further undermine the companies that they own so that they lose all their capital.
Is that the Socialist Agenda? Are you sure?
Forget about keeping the Golden Goose alive into the future, let's 'increase shareholder value' by chaining the goose up in the basement where it's cheaper and feed it on less expensive food and less of it too, or if they're really dumb, cut it open now and get all the golden eggs.
Yeah - that traditionally is what they do. They buy up huge amounts of stock in companies, elect directors who mismanage the cash and their investment becomes worthless.
Every time. You would think that they might learn eventually.
This woman can take her fund's money and invest it with Bernard Madoff and see how well she does.
Time will tell.