B usinessWeek has published a story calling Appleis board among the eight worst in corporate America. The magazine released its fourth annual rankings of boards of directors this week, with this yearis 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 Jobsi lack of stock holdings in the company, Larry Ellisonis 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 BusinessWeekis 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 werenit, we polled the nationis 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, weive 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 Universityis 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."
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The changes at those companies warranted their inclusion on BusinessWeekis 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.
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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 Appleis compensation committee--even though Micro Warehouse accounted for nearly 3% of Appleis 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 boysi 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 arenit stuffing their pockets?"
The magazineis 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 Appleis 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 otheris boards.
You can find the full story, as well as the specific listings at BusinesWeekis online site.