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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

By Jena McGregor

 |  January 18, 2011; 9:38 AM ET |  Category:  CEO watch , Corporate leadership , Technology Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
Previous: Jobs' medical leave creates uncertainty for Apple, investors | Next: Behind the curtain: Besides Jobs, Apple's other leaders

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The Steve Jobs "succession crisis" illustrates the huge danger of "charismatic" leadership. Due to his abilities as a leader and businessman, Jobs has turned his name into a sort of brand, one that is nearly as important as, and often synonymous with, the Apple brand itself. While the charismatic leader is part of the organization, he can be an incredibly dynamic force and an important agent of growth and prosperity. However, his absence can leave a gaping hole that destroys the organization. If the state of the organization after a leader leaves is a measure of success, then charismatic leadership is seriously flawed.

With regard to the publication of Apple's succession plan, this could be a dangerous precedent for the company to set, especially if the plan must be presented annually. During George Steinbrenner's years running the New York Yankees, he had several publicly known "heirs apparent." One of these men was his son-in-law who later divorced Steinbrenner's daughter. Other potential successors left the organization for various reasons. In the end, it was Steinbrenner's two sons--Hal and Hank--who took control. Since neither had ever been associated with top leadership in the Yankees organization, there was a public perception that they had been initially rejected by their father as capable baseball executives. Their reputation outside the organization was severely crippled by the publicity of their father's succession plans. Given the volatility that can occur in the corporate world, it seems unwise to declare someone "future CEO" until the job is available for him to take.

Posted by: Henry_Hancock | January 21, 2011 1:43 AM

Intuit Quickbooks = sleezy business. So i get a call sayng that they have on record more activations than allowed under the license agreement. Therefore my work has to pay for the additional activations. Oh and heres the catch. They said since its been activated last year, we will still have to pay even if we had uninstalled it. Well the reality is we reinstall and reactivate the program when we troubleshoot our own computers. So how do they tell which activation is real?
Then charging about $300 per activation for small businesses is such a sleezy way of ripping companies off in an economic recession. The shady part is, they dont tell you until you go over your activation limit a few times. Instead of telling us upfront, they want to charge us and make money off smaller companies. What a sleezy business.
Why even make it possible to install more than the allowable activations? So they can come back and charge business for the extra activations AFTER THE FACT
Microsoft Office 2007 will say one disk is for 3 installations and won't let you install more than 3 times, but Quickbooks allows you to go over their installation/activation limit without warning. Charge for "violations" after the fact. That's called sleezy business. Trying to rip off the small businesses that help the country's job growth. No wonder Intuit stocks aren't going anywhere
Microsoft Office 2007 will say one disk is for 3 installations and won't let you install more than 3 times, but Quickbooks allows you to go over their installation/activation limit without warning. That's called sleezy business. Trying to rip off the small businesses that help the country's job growth.

Posted by: matchmatch111 | January 20, 2011 3:56 PM

This commentary strikes me a naive and vacuous. Or, as Shatner might say, 'Namby Pamby'.

Posted by: getjiggly2 | January 18, 2011 11:39 PM

Lay off the Trentas Jena.

As a flesh and blood person, I wish Steve Jobs, a long life. As a fan of Capitalism I wish the best for Apple (and reserve the right to gripe).

Investors who have not long ago discounted the "risk" that Steve Jobs is not immortal ? I don't care. What are they thinking ? More to the point are Apple Investors "Leadership" to be followed ? Will they share the wealth if Steve Jobs recovers ? Not likely.

Posted by: gannon_dick | January 18, 2011 12:25 PM

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