Revealing Apple's succession plan?
The news Monday that Apple CEO Steve Jobs was taking yet another leave for health reasons set off a flurry of debate on critical leadership questions for one of the world's most successful companies. How deep is the bench at Apple, where Steve Jobs has always played such a central and seemingly irreplaceable role? How much should Apple have to reveal to shareholders about the CEO's health and the length of his leave? What responsibility does Jobs, as a leader, have to open up about his health, or does he deserve complete medical privacy?
Here's another: At a company where the CEO is seen--rightly or wrongly--as a critical factor in the company's ability to perform over the long term, does Apple have a responsibility to shareholders to make its succession plan public?
That's at least what one investor, the Central Laborer's Pension Fund, claims. Like a growing number of institutional shareholders making similar proposals at other companies, the pension fund is pushing for more disclosure about who the heir to Jobs' throne will be. The fund submitted a proposal to be voted on at Apple's annual meeting February 23. It asks the board, among other things, to identify internal candidates in line for the top job and prepare an annual written report to shareholders on its succession plan.
Apple, of course, is against this idea. In filings made just 10 days before Jobs' leave was announced, the company says it already does much of what the pension fund requests, and claims the proposal would "undermine the Company's efforts to recruit and retain executives." Those not identified as potential successors might be poached to other firms or feel rejected enough they'd leave the company on their own. The proposal, the company argues, "attempts to micro-manage and constrain the actions of the Board."
I believe the company needs to share more about how long Jobs will be--or could be--away, the gravity of his illness and how much he'll still be involved. It should clear up confusing decision lines--Cook may be running things "day to day," as the release states, but it also says Jobs remains CEO. As it stands, the company's statement is likely to prompt questions both for investors and employees, and doing more to reduce that ambiguity would be considered good management.
But I agree the company has a right to reject this proposal to change its corporate governance rules. Apple is not entirely opaque about a likely succession plan, after all. While the board may not have put a crown upon Cook's head, it is giving him the chance to run the company--again--on a day-to-day basis, something he did in early 2009 to universally good reviews. Succession planning is a critical responsibility of the board and many do a terrible job of it, but companies should not be forced to disclose who's next in line for the top job, even at a place where the leader matters as much as it does at Apple. Sure, it very well might be the prudent thing to do--and many companies with far less uncertainty at the top do choose to disclose their heirs apparent, often to put candidates in the spotlight--but the board is also correct that doing so could cause a loss of top talent and potential unease among its senior ranks.
In a sense, this debate--should Apple reject the pension fund's proposal to make succession plans public--is similar to the bigger one, on whether or not the company should share more about Jobs' health condition. Jobs' right to medical privacy matters, just as the company's right to keep its succession plan private is one worth protecting. In the end, the real question is what a leader or group of leaders chooses to do at a time like this. Do they protect their rights in the face of criticism? Or do they share more in an attempt to calm nerves and put stakeholders' needs first, even if it means taking on greater internal risk?
Related articles by Jena McGregor:
Jobs' medical leave creates uncertainty for Apple, investors
January 18, 2011; 9:38 AM ET |
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