Apple held its annual shareholder meeting earlier on Thursday—it was mostly a snoozer, but there were a few highlights to share. I was on hand for the event, and offer up the following observations for your enjoyment.
The first thing is to understand that Apple’s annual shareholder meeting is where Apple’s management grudgingly acknowledges that other people own the company. Part of that process is to pretend that they care what the shareholders think, to listen to their questions, observations, complaints, and gushing, nod their heads politely, and then respond in such a way that we all pretend that they care.
Apple & CEO Tim Cook
That might sound bitter and snarky, but I don’t mean it that way. Apple has done good by its shareholders, among which I number myself, and I believe that the company’s executives and directors take their obligations to those shareholders to heart.
There’s a vast gulf between caring about us and caring about what we have to say, however, and Apple’s management has seldom been interested in what the company’s shareholders have to say. On the other hand, this is part of Apple’s magic—heck, let’s be honest and acknowledge that the company barely cares about what its customers have to say.
And when your company’s stock has risen as much as Apple’s has over the last ten years, you typically get a free ride from the your shareholders. It’s only activists of political or financial persuasion that have much to grouse about, and as such, they get a disproportionate amount of time at these annual meetings.
So, with that backdrop, the annual shareholder meeting is a formality, one required by law. We show up and vote, but most votes are already decided ahead of time through proxy shares. All the big shareholders cast their votes in this fashion, which is why we get preliminary results at the meeting.
This year, for instance, 83.27 percent of all outstanding shares were represented at the meeting through either a direct presence or by proxy votes already cast.
Majority Rules
The only shareholder proposal that passed was #7, Adopt a Majority Voting Standard for Director Elections. In other words, for the next election of Apple’s board of directors, a majority vote will be required for each board member to get or keep his or her job.
Apple previously had a sort of pass/fail system that allowed management to have a free hand with its board. The California Public Employees’ Retirement System (CalPERS) led the effort to get the new system in place, and it passed with 80.35 percent of shareholders voting “For” the proposal.
Bruce Sewell, Senior Vice President and General Counsel for Apple, announced this one at the very beginning of the meeting. When doing so, he quipped:
[Adopting a majority voting standard] does present some complexity, but we’re Apple, and we don’t let complexity get in our way.
This turned out to be a great laugh line, as the audience chuckled its appreciation.
It’s About the Politics, Idiot
There were actually a few semi-political moments of this meeting. The first came up when shareholder proposal 3 was presented by the self-described “conservative think tank” The National Center for Public Policy Research.
The point of this proposal was to get Apple to force former U.S. Vice President Al Gore to admit that he has a conflict of interest as a board member of Apple relating to Apple having pulled out of the U.S. Chamber of Commerce to protest that organization’s lobbying against curbing greenhouse emissions.
The dude that presented argued that Apple has no business justification for doing so, but that Al Gore will benefit because he has invested in green technologies.
Interestingly, this was when I noticed Shelton Ehrlich, the longtime Silicon Valley resident who has a history of speaking out against any and all progressive environmental issues at shareholder meetings. In 2009, I wrote a column where I called Mr. Ehrlich “comic relief” for Apple’s meeting that year.
In any event, when the National Center for Public Policy Research dude presented his proposal, Mr. Ehrlich was the one person who clapped. I hadn’t noticed him before that, and it was the very fact that his was the only positive reaction to the Chamber’s puppet that made him stand out.
It turns out that only 1.9% of Apple’s shareholders voted for this proposal, meaning it failed. A lot.
The (polite) attack on Al Gore and Apple taking a stance on environmental concerns resulted in two more semi-political moments. The first was when a shareholder said, “With all due respect, we should leave Al Gore alone.” This time around, what seemed like most of the people in attendance applauded and cheered, but I didn’t exactly get a head count.
The second moment came later in the meeting when CEO Tim Cook was talking about the majority vote. He paused a moment, looked over at Al Gore, and said, “As you know, it doesn’t [always] matter who gets the most votes,” a reference to Mr. Gore getting a majority of the popular vote in the presidential election of 2000, but losing the electoral vote to George W. Bush.
Please note that this was as political as it got, and that’s saying something considering how big Apple is. There weren’t any questions about Apple’s lobbying practices (either for or against), legislation that might affect Apple’s business, or even questions about a tax amnesty that would allow Apple to repatriate some of the $60 billion (and more) it has overseas. With Apple doing more than $100 billion per year in sales, that’s something.
No, Wait: It’s About the Cash
There were also surprisingly few questions about Apple paying some of its giant cash hoard out to shareholders in the form of a dividend. The only real question was more of a suggestion from a shareholder and Apple fan who didn’t want Apple paying a dividend, but instead wanted the company to create a preferred class of stock and to spend the rest of its money on improving its video content offerings.
Yeah, nice one.
In the past, institutional investors and other activists have lobbied for Apple to consider a dividend at some point during the meeting.
Another Laugh Line
One of the better laugh lines came when a shareholder told Tim Cook, marketing VP Phil Schiller, and CFO Peter Oppenheimer, “This was on my bucket list, so now I can check off that I got to talk to you.”
He wasn’t done, though, because his second question was about a TV. He said, “I just bought a 60-inch TV for the Super Bowl, and I have 60 days to return it.”
He paused and the crowd laughed, because everyone knew what he was really asking.
“So…” he said, with another pregnant pause, “Should I return it?”
It was a very cute and clever way to ask if Apple was going to be releasing a TV, and it got the biggest laugh of the meeting. Even Tim Cook laughed, though he declined to comment with a big smile on his face. Make of that what you will.
This same guy still wasn’t done, because he used a third question to ask if Apple could please just buy Greece so that everyone could just forget about it. This also got a big laugh. Tim Cook jokingly treated it seriously and said that was one thing the board hadn’t considered when contemplating what to do with all of its money.
Tim Cook
One interesting thing about the meeting was that this was the first such meeting since Steve Jobs passed away in October.
As noted by noted architect, Neal Pann, who was sitting beside me at the meeting, in recent shareholder meetings, Steve Jobs had made a point of passing a lot of questions to other execs, including Tim Cook, Phil Schiller, and Peter Oppenheimer. This was surely part of Mr. Jobs’s effort to build a company that would outlast him, and to show that Apple Inc. was more than just Steve Jobs.
In stark contrast, Tim Cook fielded every question at this meeting, and was ever-so-clearly in charge. Phil Schiller and Peter Oppenheimer were never tasked with answering a question, and both asked for permission to add to responses Mr. Cook had already made.
While Mr. Jobs was showing that there was more to Apple than Steve Jobs, Tim Cook’s job this year was, at least in part, to show shareholders that he is firmly in charge of his company. I think he accomplished that task in a very positive way.
He also put a little more effort to sell us on the idea that he is a product guy, something I believe he first began to do during an interview earlier in February at the Goldman Sachs Technology and Internet Conference.
He spent a few minutes talking about what great products Apple has, how much progress it made with the iPhone 4S and iPad 2, how important Siri has already become, and how far Apple’s Macs came during 2011.
In fact, my favorite quote from him was about Macs and innovation, when he said, “Arguably, we were the only company innovating in computers [in 2011], and we have been [the only company to do so] for some time.”
I love hearing him talk about products and the importance of great products, and I hope he continues to do so.