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Pension giant challenging Apple over corporate governance

post #1 of 65
Thread Starter 
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.
post #2 of 65
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.
post #3 of 65
Quote:
Originally Posted by monstrosity View Post

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?
post #4 of 65
Quote:
Originally Posted by sflocal View Post

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.
post #5 of 65
Quote:
Originally Posted by LeCorsaire View Post

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.
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post #6 of 65
Quote:
Originally Posted by magicj View Post

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.
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post #7 of 65
Quote:
Originally Posted by boeyc15 View Post

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.
post #8 of 65
Ooooh... Apple posts a profit and here come the socialists to ensure social (in)justice. Every year, these pension commies and unions try to muscle their way into Apple. If they succeed, Apple will face the same future as GM and Chrysler... low profits stifling R&D which leads to crappy products and poor morale.

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.
post #9 of 65
Quote:
Originally Posted by MacinTek View Post

Ooooh... Apple posts a profit and here come the socialists to ensure social (in)justice. Every year, these pension commies and unions try to muscle their way into Apple. If they succeed, Apple will face the same future as GM and Chrysler... low profits stifling R&D which leads to crappy products and poor morale.

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:

Quote:
Originally Posted by boeyc15 View Post

...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.
post #10 of 65
Quote:
Originally Posted by MacinTek View Post

Ooooh... Apple posts a profit and here come the socialists to ensure social (in)justice. Every year, these pension commies and unions try to muscle their way into Apple. If they succeed, Apple will face the same future as GM and Chrysler... low profits stifling R&D which leads to crappy products and poor morale.

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!
post #11 of 65
Quote:
Originally Posted by LeCorsaire View Post

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.
post #12 of 65
It is just about the pile of cash that Apple has! They want dividends.
post #13 of 65
CalPERS is simply irrelevant. They should deal with their own governance issue before arrogating themselves to dispensing governance advice to others (especially to outstandingly successful firms like Apple): See, e.g., http://www.bloomberg.com/news/2010-0...llion-gap.html

What a joke.
post #14 of 65
Yawn. Maybe CalPERS should focus on its utter fiscal insolvency.
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post #15 of 65
Quote:
Originally Posted by sflocal View Post

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.
post #16 of 65
Quote:
Originally Posted by LeCorsaire View Post

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.
post #17 of 65
Quote:
Originally Posted by MacinTek View Post

Ooooh... Apple posts a profit and here come the socialists to ensure social (in)justice.

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?
post #18 of 65
Quote:
Originally Posted by Banalltv View Post

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.
post #19 of 65
She is just trying to justify her Job. This bullshit will not happen at Apple if the existing board does not want it. The share holders will back Steve and the current board.

This woman can take her fund's money and invest it with Bernard Madoff and see how well she does.

Time will tell.
post #20 of 65
Quote:
Originally Posted by MacinTek View Post

Ooooh... Apple posts a profit and here come the socialists to ensure social (in)justice. Every year, these pension commies and unions try to muscle their way into Apple. If they succeed, Apple will face the same future as GM and Chrysler... low profits stifling R&D which leads to crappy products and poor morale.

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.

ENRON posted big profits too, look where they are. It is all about keeping that from happening again.
post #21 of 65
Quote:
Originally Posted by Hellacool View Post

ENRON posted big profits too, look where they are. It is all about keeping that from happening again.

Yeah, Apple must be an Enron in lurk mode.
post #22 of 65
Quote:
Originally Posted by anantksundaram View Post

Yeah, Apple must be an Enron in lurk mode.

You don't know.
post #23 of 65
Quote:
Originally Posted by Hellacool View Post

ENRON posted big profits too, look where they are. It is all about keeping that from happening again.

Hellacool, so you're saying there's evidence that Apple is cooking the books?

Are ALL companies guilty until proven innocent?

Your thinking is EXACTLY why we have the ridiculously massive TAX called Sarbanes Oxley.

Ever wonder why Facebook is still private? Ever wonder why the IPO market is dry as a bone over the past several years?

See Hellacool's statement for why.

The initial assumption is that all corporations are big greedy evil liars until someone proves otherwise.
post #24 of 65
Quote:
Originally Posted by Hellacool View Post

You don't know.

Some dude on my block committed tax fraud. Therefore... there is a good chance Hellacool is ALSO COMMITTING TAX FRAUD. I'm calling for an immediate audit of Hellacool's taxes.

Of course Hellacool will be responsible for the entire cost of the audit. He will also not be compensated for all of the lost time because of the audit. Also, he will need to adjust his lifestyle to conform to the will of his auditors. Because Hellacool had decided to remain an American citizen, we have a right to DEMAND this of him.

And there my friends... is SarbOx. Out of the ashes of Enron and the collective groupthink of folks like Hellacool that you are guilty until proven innocent.
post #25 of 65
Quote:
Originally Posted by bobringer View Post

Hellacool, so you're saying there's evidence that Apple is cooking the books?

Are ALL companies guilty until proven innocent?

Your thinking is EXACTLY why we have the ridiculously massive TAX called Sarbanes Oxley.

Ever wonder why Facebook is still private? Ever wonder why the IPO market is dry as a bone over the past several years?

See Hellacool's statement for why.

The initial assumption is that all corporations are big greedy evil liars until someone proves otherwise.

So you are saying that there was evidence that ENRON was cooking the books and it still happened? Bottom line ENRON screwed allot of people and no-one was the wiser until it was too late. People were dumping money into ENRON because the cooked books looked great and the profit reports were fantastic. Investors are not going to let this happen again and have every right to do so. If Apple doesn't like it, they can buy up all their stocks and take the company private. Until then, anyone with a majority stake in the company has a say.
post #26 of 65
Quote:
Originally Posted by Hellacool View Post

So you are saying that there was evidence that ENRON was cooking the books and it still happened? Bottom line ENRON screwed allot of people and no-one was the wiser until it was too late. People were dumping money into ENRON because the cooked books looked great and the profit reports were fantastic. Investors are not going to let this happen again and have every right to do so. If Apple doesn't like it, they can buy up all their stocks and take the company private. Until then, anyone with a majority stake in the company has a say.

Hey, they have a say. And the other 98% of shareholders that have made VAST amounts of wealth off of Apple can laugh at CalPERS all the way to the bank.

Treating all corporations like they are guilty until proven innocent is not a way to run a country.
post #27 of 65
Quote:
Originally Posted by bobringer View Post

Some dude on my block committed tax fraud. Therefore... there is a good chance Hellacool is ALSO COMMITTING TAX FRAUD. I'm calling for an immediate audit of Hellacool's taxes.

Of course Hellacool will be responsible for the entire cost of the audit. He will also not be compensated for all of the lost time because of the audit. Also, he will need to adjust his lifestyle to conform to the will of his auditors. Because Hellacool had decided to remain an American citizen, we have a right to DEMAND this of him.

And there my friends... is SarbOx. Out of the ashes of Enron and the collective groupthink of folks like Hellacool that you are guilty until proven innocent.

Wow your example is a bit off considering you have no stake in my taxes or affairs on the other hand these investors have a large stake in Apples affairs and have every right to intervene when they see fit. If Apple doesn't like it then they can buy back all their stocks and go private but since they are a public company they will have to do what they are told.
post #28 of 65
Quote:
Originally Posted by bobringer View Post

Hey, they have a say. And the other 98% of shareholders that have made VAST amounts of wealth off of Apple can laugh at CalPERS all the way to the bank.

Treating all corporations like they are guilty until proven innocent is not a way to run a country.

They are not running a country they are running a business. How you can confuse the two is beyond me. These are citizens that own stock in a public company end of story.
post #29 of 65
Quote:
Originally Posted by Hellacool View Post

ENRON posted big profits too, look where they are. It is all about keeping that from happening again.

Lot good that did! Fanny Mae, Freddie Mac, politicians of all stripes middling in the process of what banks and lenders know, you don't sell to someone who can't afford. Look what that has got us in the Housing Industry over the past two years. Home not foreclosed on, consider yourself lucky.

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post #30 of 65
Quote:
Originally Posted by Hellacool View Post

Wow your example is a bit off considering you have no stake in my taxes or affairs on the other hand these investors have a large stake in Apples affairs and have every right to intervene when they see fit. If Apple doesn't like it then they can buy back all their stocks and go private but since they are a public company they will have to do what they are told.

Public companies just "have to do what they are told." By who? By a 2% shareholder? Apple must bow down everytime a 2% shareholder says "do what you are told."?

Or, is it the GOVERNMENT that should just always tell companies how they should be run?

You can go to Cuba or Venezuela if you want that.
post #31 of 65
Quote:
Originally Posted by Rot'nApple View Post

Lot good that did! Fanny Mae, Freddie Mac, politicians of all stripes middling in the process of what banks and lenders know, you don't sell to someone who can't afford. Look what that has got us in the Housing Industry over the past two years. Home not foreclosed on, consider yourself lucky.

Not lucky, just not an idiot. To many people bought way more house than they could afford, I didn't.
post #32 of 65
Quote:
Originally Posted by bobringer View Post

Public companies just "have to do what they are told." By who? By a 2% shareholder? Apple must bow down everytime a 2% shareholder says "do what you are told."?

Or, is it the GOVERNMENT that should just always tell companies how they should be run?

You can go to Cuba or Venezuela if you want that.

Yes, a public company is owned by the shareholders. If a shareholder has enough shares they have a say. If Microsoft went around secretly and bought up enough Apple shares guess who is calling the shots? It is that simple. When you are public you are public. This has zero to do with the government so put away your tin foil hat. Just think about how much money is 2% of Apple. People have a right to protect that.
post #33 of 65
Quote:
Originally Posted by Hellacool View Post

Not lucky, just not an idiot. To many people bought way more house than they could afford, I didn't.

So, the people that invested in Enron weren't idiots... they just needed to be protected by the government. HOWEVER, the people that lost all their money in Fanny/Freddy stocks were idiots? We're talking stocks here now if you want to continue comparing apples to apples.

Punishing everybody for the acts of a few does nobody any good. There were already laws on the books to make what Enron did illegal. You want to make everybody else guilty until proven innocent.
post #34 of 65
Quote:
Originally Posted by Hellacool View Post

These are citizens that own stock in a public company end of story.

They are also Union and that should sound alarm bells from the start! Plus it's a union from California and it is for the benefit of "PENSION FUND"!... Run! Run as far away as you can!!

Seriously, if anyone's books need to be audited it is the California Union's Pension Funds!

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post #35 of 65
Wow, way to completely derail the conversation.

Actually, if I were California (the state) I would be telling these people to shut the hell up, because the solution to all of this seems very easy to me. Apple moves all of its interest out of California (along with all of their taxes).

Than even if this does pass they can move to one of those states where it is meaningless because it is not required by law that the board member quits. Therefore, the only people who lose in the end is California and its already cash strapped citizens. After all, I am sure Washington state would be more than happy to welcome them. Apple could move in right next door to Microsoft.
post #36 of 65
Quote:
Originally Posted by Hellacool View Post

You don't know.

Just as you don't know about those aliens likely living in your tooth filling.
post #37 of 65
Quote:
Originally Posted by mknopp View Post

Wow, way to completely derail the conversation.

Actually, if I were California (the state) I would be telling these people to shut the hell up, because the solution to all of this seems very easy to me. Apple moves all of its interest out of California (along with all of their taxes).

Than even if this does pass they can move to one of those states where it is meaningless because it is not required by law that the board member quits. Therefore, the only people who lose in the end is California and its already cash strapped citizens. After all, I am sure Washington state would be more than happy to welcome them. Apple could move in right next door to Microsoft.

Yep...

At the end of the day, looking at the original story. Is this not just completely laughable? How can you look at Apple and AAPL and think they just don't have the interest of shareholders in mind? For the past 10+ years, I've seen Jobs say the exact same thing everytime he's asked about the share price. "We don't worry about share price. We worry about making great products that people want and we believe that if we do that, the share price will follow."

Sounds like a pretty reasonable approach to me!
post #38 of 65
Quote:
Originally Posted by mknopp View Post


Than even if this does pass they can move to one of those states where it is meaningless because it is not required by law that the board member quits. Therefore, the only people who lose in the end is California and its already cash strapped citizens. After all, I am sure Washington state would be more than happy to welcome them. Apple could move in right next door to Microsoft.

Maybe that explains all that extra land that was purchased in NC!
post #39 of 65
Quote:
Originally Posted by Hellacool View Post

Until then, anyone with a majority stake in the company has a say.

CalPERS is not a majority stakeholder. They (logically) invested part of their fund because they thought it was a well run company that showed signs they were going to be successful in the future. They should divest themselves of their holdings if they now have concerns about that company.
post #40 of 65
Quote:
Originally Posted by Hellacool View Post

So you are saying that there was evidence that ENRON was cooking the books and it still happened? Bottom line ENRON screwed allot of people and no-one was the wiser until it was too late. People were dumping money into ENRON because the cooked books looked great and the profit reports were fantastic. Investors are not going to let this happen again and have every right to do so. If Apple doesn't like it, they can buy up all their stocks and take the company private. Until then, anyone with a majority stake in the company has a say.

ENRON was a company that COULD cook the books. Apple really can't cook the books that much. Apple has a tangible output - Macs, iPods, iPhones, MacOS and othe Software, Retail Sales, iTune Sales, etc.

I really can't see the ENRON thing happening at Apple.

What I see a better chance of happening is that market and stock analysts artificially ballooning Apple's stock price due to overly optimistic projections.
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