January 18, 2011 7:45 pm
Mr Jobs has personally overseen the introduction of products including the iPhone, iPod and iTunes online music store, the popularity of which transformed the hand-held computing and digital download markets. He is also the driving force behind the iPad, which in its first year captured 90 per cent of the tablet computing market and spawned a host of imitators.
Beyond that, Mr Jobs is the guardian of the powerful Apple brand, a hero to many, and a visionary who has presided over a successful melding of digitised content with reliable consumer electronics products.
Investors and Apple’s loyal followers believe Mr Jobs is irreplaceable, and yet, irrespective of his health issues, he will need to be replaced as chief executive at some point.
The lack of clarity about when and how that will happen has produced some of the strongest criticism of the company, which has otherwise managed to enrich shareholders and delight customers for most of the 13 years since Mr Jobs returned from exile to the company he co-founded.
Just this month, Apple said it opposed a shareholder proposal from the Central Laborers’ Pension Fund of Jacksonville, Illinois, that would call on the board to make public reports each year on the state of its succession planning.
The company said that it already has a regularly reviewed plan in place. If it were forced to name candidates, it feared that those not named could resign, while those named could be poached by competitors.
In fact, the proposal did not explicitly ask for public naming of successor candidates.
“Our proposal is intended to have the board adopt a written policy containing several specific best practices in order to ensure a smooth transition”, the fund wrote in the proxy filing for Apple’s annual meeting next month.
Similar proposals are making headway around the US. The issue will be put before investors at Apple and perhaps 10 other companies this year, said Patrick McGurn, executive director of the voting advisory firm Institutional Shareholder Services. The issue has gathered momentum from the unexpected departures of the chief executives of Hewlett-Packard, Sara Lee and Pfizer.
The efforts for better disclosure of succession plans are also drawing strength from recent studies. In a report last month, recruiter Korn/Ferry found a majority of global companies did not have a succession plan in place.
Mr McGurn said ISS had not taken a position on Apple’s shareholder resolution.
Some investment analysts said on Tuesday that the board of Apple had already indicated its choice.
Tim Cook, chief operating officer, who improved Apple’s slipshod manufacturing process after he arrived from Compaq in 1998, ran the company during Mr Jobs’ 2009 medical leave of nearly six months and will take on the same role this time.
More to the point, Apple disclosed this month that it had given Mr Cook an extraordinary bonus of $22m in cash and restricted stock in recognition of his service in 2009.
“Apple’s succession plan is obvious to us – Tim Cook is a proven executive who can handle the pressure and knows how to run the inner workings of Apple in Steve’s shadow,” Ben Reitzes, Barclays analyst, wrote in a note to clients.
In the short term, analysts said Apple would continue to flourish, with a second-generation iPad due in months, recent share gains in the PC market and with its role as the leading platform for applications that run on portable devices.
Mr Cook will be backed by industrial design chief Jonathan Ive, marketing chief Phil Schiller and other talented executives. Former employees said that in some ways, decision-making could even be smoother without the mercurial Mr Jobs.
Whether Mr Cook will be the one to take Apple forward or a dark horse will emerge as a bold gambler with an unerring sense of what consumers want is much less certain.
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