Apple shareholders propose, directors oppose

Stephen Withers
Friday, 09 January 2009 08:20

Opinion and Analysis

In Apple's case the list of peers includes Amazon, Cisco, Dell, Google, HP, IBM, Intel, Microsoft, News Corp, Time Warner, Walt Disney and Yahoo!.

However, the board notes that those companies' practices are only reviewed to help ensure that Apple is reasonably competitive, and that it doesn't tie compensation to specific figures such as "above the median" or "at the 75th percentile."

The board argues that it is part of its job to set executive compensation, and that provision for an advisory vote could be taken as a signal that compensation opportunities could be restricted, making it harder to recruit and retain exceptional executives.

In any case, the board notes that there may be new legislation that will require advisory voting on executive compensation, and argues that Apple would be best served by promptly adopting any mandatory changes.

So what's the likely outcome?

Shareholder resolutions rarely get across the line, often because large institutional investors typically follow board recommendations. The reasoning seems to be that you either go with the board or you vote it out.

If any of the four is to get up, it is perhaps most likely to the one regarding executive compensation, which was supported by the majority of the shares voted at the 2008 meeting but failed the additional hurdle of support by the majority of voting power required to constitute the quorum.