BusinessWeek Rates Apple's Board Among The 8 Worst In America
BusinessWeek Rates Apple's Board Among The 8 Worst In America
by , 10:00 PM EDT, September 27th, 2002
BusinessWeek has published a story calling Apple's board among the eight worst in corporate America. The magazine released its fourth annual rankings of boards of directors this week, with this year's report getting the extra focus from the Enron and World Com scandals. Apple was listed at the top of the worst boards because of Steve Jobs' lack of stock holdings in the company, Larry Ellison's attendance and similar lack of AAPL holdings, and the suggestion of an incestuous relationship between the boards at Apple and Gap, Inc. From the report:
The depth and breadth of the changes taking place become clear in BusinessWeek's fourth ranking of the best and worst corporate boards in America, a survey we first undertook in 1996. To determine which boards were getting it right and which weren't, we polled the nation's top governance experts and conducted an in-depth analysis of dozens of boards, looking at everything from director credentials to stock ownership to attendance. This year, besides listing the best and worst boards in America, we've added three new categories: Most Improved Boards, Boards That Need Work, and a Hall of Shame.
The yearlong study provided a richly detailed view of governance in the post-Enron age, revealing a broken system undergoing radical repairs. "Enron is bringing about the most sweeping structural changes in governance that have ever occurred," says Donald P. Jacobs, former dean of Northwestern University's Kellogg School of Business and a governance watcher. "We thought there had been an enormous increase in the quality of boards, but Enron has shaken the hell out of that confidence."
The changes at those companies warranted their inclusion on BusinessWeek's list of most-improved boards, but even the worst boards in our rankings made some positive changes. Apple Computer Inc. (AAPL ) and Qwest Communications International (Q ) have both prohibited their outside auditors from doing nonaudit work for the company.
At Apple, Steven P. Jobs owns just two shares of the company he founded nearly three decades ago. Even worse, the CEO of Micro Warehouse Inc., Jerome B. York, sits on Apple's compensation committee--even though Micro Warehouse accounted for nearly 3% of Apple's net sales in 2001. In the past two years, the board has awarded Jobs 27.5 million stock options and a $90 million jet, though it has saved on salary because Jobs has worked for $1 a year since his return to Apple in 1997. Apple declined to comment, but shareholders are aghast. "This is the old boys' network at its worst," says James C. Voye, international representative for the International Brotherhood of Electrical Workers pension fund, which launched an unsuccessful campaign for an independent compensation committee. "How do shareholders have any faith that these insiders aren't stuffing their pockets?"
The magazine's write up of Apple from the eight board roundup:
Founder Steve Jobs owns just two shares in the company. Recently departed director Larry Ellison had none and had missed more than 25% of meetings in the past five years. The CEO of Micro Warehouse, which accounted for nearly 2.9% of Apple's net sales in 2001, sits on the compensation committee. Since 2000, the board has awarded Jobs 27.5 million stock options and a $90 million jet. There is an interlocking directorship--with Gap CEO Mickey Drexler and Jobs sitting on each other's boards.
The Mac Observer Spin:When we want to know what to think of board's performance, we too like to go to a union's pension fund to see what they think. Note the irony intended in that comment.
TMO is all for a hard look at Apple's performance, and we regularly report on both the good and the bad from the company's execs. This BusinessWeek report, however, is frankly a poor example of journalism. To criticize Steve Jobs compensation without mentioning his performance, or the performance of his company, for instance, is hardly appropriate. To not compare it to other CEO compensation in the tech world is also very shady. Insinuating that there is a problem with having Mr. Jobs and Mr. Drexler serving on each other's boards without citing one questionable action is also remarkable. What have they done that is wrong? Why mention the facts when assassination through innuendo will suffice?
We also don't find a problem with Mr. York serving on Apple's compensation committee. BusinessWeek suggests it is a problem because Micro Warehouse accounted for some 2.9% of Apple's sales in 2001. It is Apple that depends on Micro Warehouse, and not the other way around, so where is the problem? If Micro Warehouse depended on the goodwill of Apple, then there might be an issue. Your mileage may differ, but when it comes to choosing appropriate technology executives to sit on the board at Apple, it would seem that someone in the business of selling computers would fit the bill.
It is arguable that Apple's board could be doing some things differently, but BusinessWeek's criteria doesn't seem to add up. To borrow a thought from our own Robert Paul Leitao, Criticism + Apple = More Page Views/More Magazines Sold. It's a tried and true formula.
In a world of Enrons, World Coms, and many other companies who have been reporting oddities in their financial practices, how does Apple rate being on this list?
What do you think? Are we being too soft on Apple, or should BusinessWeek be ashamed of itself. Join in on the discussion of this issue in our forums.
- Fri,9:21 PM
- Two Free iOS Writing and Note Apps
- 9:11 PM
- Week of Who, Day Five: Curse of Fatal Death
- 5:10 PM
- Why Everything Gets Better With Apple, Worse for Others
- 4:40 PM
- Bill Gates’s ALS Ice Bucket Challenge Video
- 4:07 PM
- Coin Credit Card Launches Beta, Pushes Final Release to Spring 2015
- 3:08 PM
- TMO Daily Observations: 2014-08-22
- 1:37 PM
- Win a Canon EOS Rebel T3 DSLR in the Rebel Photographer Giveaway
- 10:44 AM
- Apple Releases OS Yosemite Public Beta 2, iTunes 12 Beta
- 10:27 AM
- Report Claims Apple Scrambling After Last Minute iPhone 6 Screen Redesign
- 9:32 AM
- Apple Adds Humana, UnitedHealth to HealthKit Discussions
- 8:45 AM
- OS X Finder: Customize Your Desktop
- Thu,8:02 PM
- Week of Who, Day Four: Inspector Spacetime